It's a surprisingly common misconception that the iPhone 4/4S is a 4G phone. It's not, and it (in terms of the current models) it never will be, but it's easy to see where people get that impression. Mind you, Apple's not doing itself any favours in this regard, given that some US iPhone users are being explicitly told that their phone is connecting to a 4G network. The upcoming iPad will be Apple's first actual 4G LTE device, although, as we've covered extensively, that 4G support will not extend to Australian networks at this time. Users on AT&T's network with the iOS 5.1 update could be forgiven for thinking that their 4 and 4S handsets were suddenly 4G capable -- because that's exactly what the status indicator tells them.
Informationweek suggests that the issue relates to the way AT&T's HSPA+ network detects and identifies itself, although whether the bug is AT&T or Apple's fault isn't terribly clear; if it's Apple's fault we could expect phones on Telstra's HSPA+ network to start saying they're 4G-capable as well. If it's AT&T's fault, expect lawsuits to follow in that particularly American way.
Update: OK, this is (as several have pointed out) a deliberate move on AT&T's part. As I've pointed out before, calling non-4G technologies 4G is bad business for consumers; here's hoping no Australian carriers similarly convince Apple to flick the necessary software switches to make their HSPA+ networks appear as "4G". [InformationWeek via Slashgear]