When the problem is limited to highly populous areas like New York and Chicago and the phones work better if not flawlessly in suburbs and smaller cities the network most definitely is the problem.
It is completely possible that it is a problem with the iPhone, but one that is only visibly affecting the network when there's a high density of iPhones being used in a small geographical area.
It's like the whole controversial 'pre-fetch' setting on Fasterfox and other 'web accelerators'. It's fine for individual users, but it violates the contract of how network clients (browsers) are expected to act.
Once there's a sizable number of people using the technology it becomes a problem that affects everyone.
To say that the issues only occur in large metropolitan areas does not completely exclude the iPhone itself from being a contributing factor.