Why do I get dropped calls and weak signal with Samsung Galaxy 3 5801 mobile? Samsung Galaxy 3 5801 phone with android 2.1 OS.

When I enable GPRS I am getting dropped calls and weak signal. When I disable GPRS I find my calls don't drop and the signal much better.

Is it a hardware issue or service provider issue or a software issue? How can I fix it?
It's almost certainly a software issue, I have read forum posts saying that the call gets dropped when apps/accounts try to sync over the data connection.  As a temporary solution you can turn off account sync/background data.  Hopefully it will be fixed in 2.2.