Well, the good thing is that you're up and working. Others are still having issues but with the other radios that have the built in Uconnect modules.

 

Evidently it's a problem with the Uconnect. I have a 2010 Jeep Grand Cherokee with the handsfree UConnect. By telling the UConnect to "Forget this device" I finally was able to get the phone to actually function while I'm in the car, but not thru the UConnect Bluetooth. I took it in to the dealership who did an hour long flash drive update, but that didn't fix it. They tell me the UConnect is as up to date as it can be. The Iphone 4 worked fine until I updated to the ios5 and I am soo sorry that I did. Now I see another update is available and I'll be sure to backup before I do any further backups. Altho I don't see how it could get any worse. I'll report back if that helps.

 

you know if you can restore the phone back to factory specs which will revert the software back to iOS 4+.
be sure to back your phone up first with itunes via corded connection (since you will not have icloud)

 

I don't know what they did at the dealer but there is no update for the 2010 Uconnect systems, only the 2011. Were they trying to update the radio or the Uconnet module? I have tested the Iphone 3 & 4 both with the 5.0 updates on them with no issues on the 2010 Uconnect system. Mine are ATT, I have also a friend with the Verizon iPhone 4 with the update on it that I can test next week.
I looked back and saw that your issue is only when driving, is that correct?
1) what radio do you have?
2) what network is your phone on?
3) When you are driving and the call is dropped, what is the signal strength showing on the radio?
4) Does the phone work while in motion without BT on?
5) Do you have wi-fi on? If so can you try it with the wi-fi off?