K550i signal tempermental, any idea why?

I have a SonyEricsson K550i, which I bought (Orange PAYG) as my K800i broke.
I have put my Orange contract SIM in the phone which came directly from the
K800i.

The phone is brand new and has Orange branded software (R6BC002), I live in
SP2.

The K800i always had a good signal in my house and at my desk, as does my
housemate's phone (also on Orange contract), but my new K550i doesn't, even
with the same SIM. The signal seems to fluctiate between 4 bars and
no-signal when at my desk. I've also noticed it in other areas, it just
seems far more tempermental and not as strong as my K800i.

So my questions:

1. Is this likely to be a hardware fault, i.e. another replacement handset
may fix?
2. Is this likely to be a software issue, i.e. get it unbranded and latest
softwre revision, and it may fix?
3. Is it just a cheaper phone, and they are known to have issues, and so I
should put up with it or get a different model?

Any help appreciated

Thanks