The lack of response to this thread leaves me thinking no one cares, but here's an update anyway.
It took Apple Tech support over the weekend to find out it's a known issue. Being worked on, but no ETA, and no temp fix(except resetting the phone). So, I'm shipping the loaner back, and hanging on to my phone.
The tech guy was good to work with, and he did everything he could. But, I'm disappointed in Apple. For starters this is such a fundamental function of the iPhone, how could they let this bug go unchecked for two updates no less. Then, they try to hide the issue, and don't even share the info with their tech support. I spent a few hours on the phone helping prove an issue they already knew about. A little communication would have saved me a bunch of time, and them money(loaner, time, shipping...).
At least I now know the people who keep telling me the iPhone works perfectly are full of !%$*. They are either lying, or really don't do much surfing while listening to tunes. I can reproduce this issue so quickly, now on two phones, its irrational to think anyones phone is working perfectly. So, FAN-boys, quit lying, it isn't helping anyone. I like Apple products, and buy a lot of them, but a bug is a bug, and there is nothing wrong with pointing them out, and communicating it to Apple and others.
JohnC