Chief Executive Steve Jobs defended Apple Inc.'s newest iPhone against complaints that it has a flawed antenna design, arguing that all smartphones have reception problems and saying the issue has been blown out of proportion.

Mr. Jobs, on stage Friday at Apple's headquarters, admitted the iPhone 4 loses reception when touched in the lower left corner and drops slightly more calls than its predecessor. He said Apple will offer free cases to iPhone 4 owners to alleviate the problem.

But...