I have a similar problem, but with a slight "hitch", of course. About a month ago, my iPhone 4 took a "bath"...only for a few seconds, and after getting all the water out that I could, and sitting for about 5 days in rice and gel packs, it works great...with one exception. It keeps dropping the wifi connection, which it never did before in the 3-1/2 years I've had it. To make it just a bit more strange, it only drops in certain locations of my house, and strangely enough, the worst place is in my bedroom, where the router is located!
If I'm sitting in the livingroom, adjacent to the bedroom, the connection is spotty. Often, it takes several attempts to get connected (it will never connect automatically, despite the fact that "Ask to Join Networks" is ON), and sometimes I have to re-enter the password, and even then, I often get "Unable to connect to this network at this time". Usually it will take about 3 attempts to connect, sometimes 10 or 12. If I'm in the bedroom, it won't reconnect AT ALL! Now, if I'm in the guest bathroom, down the hall AWAY from the router, it will connect on the first attempt and STAY connected until/unless I leave the bathroom. (and, it's a bit weird to hang out in there just to use the wifi on my phone...not to mention that it's not all that "comfy"!)
The phone will just randomly drop the connection, and of course, it's usually when I'm actually USING the data, but not always. I can have a connection, start a FaceBook post or text, etc., and it will just drop. But, it also will drop just sitting there, so it's not connected to the usage.
I have reset the phone several times, have reset network connections, and reset the router, as well. It doesn't matter if the case is on or off. If anyone has any OTHER ideas, I would love to hear them...I'm stumped! I know the phone is several generations old, but I love it and can't afford to get a new one (even as an upgrade), so please don't suggest I just bail on it and get a new one. THANKS!!