Apple chairman and CEO Steve Jobs is going around offering free cases to all iPhone4 users to make amends for perhaps the biggest engineering flaw in Apple’s history to date about the design of the smartphone antenna which loses signal strength and drops more calls when held in a certain way without a case.

Users who have already bought Apple’s cases, called “Bumpers,” will get the US$30 price refunded.

Jobs also said that iPhone 4 owners who are still unhappy with the device can exchange them for full refunds.

The data shows that the iPhone 4 drops more calls per hundred than the iPhone 3GS, Jobs explained in a press conference. However, the iPhone 4 drops about one call more per hundred than the iPhone 3GS, he said.

The problem is not unique to the iPhone 4, and most smartphones behave exactly the same way, he said. It’s a challenge for the entire industry.

Jobs also said Apple was “stunned and upset and embarrassed” by the comments from Consumer Reports, which earlier this week refused to endorse the iPhone 4 because of its reception problems. The publication called on Apple to take action.

“Consumers deserve answers and fairness,” Consumer Reports spokesperson Lauren Hackett said about Jobs’ speech. “Providing free Bumpers and cases is a good first step toward Apple identifying and finding a solution for the signal-loss problem of the iPhone 4.”

Jobs’ speech at the press conference was “classic brand protection”. You admit that you have a problem, you put out the facts as you see them, you recognize that not everyone will agree with you and you make them feel good anyway.

“Apple’s clearly managing the situation well.”