One thing that past iPhone owners might not have noticed on the iPhone 4 is a change to the equalizer (EQ) feature found under Settings > iPod > EQ. It’s not obvious from just looking at the screenshot, but if you plug a pair of headphones in, start listening to a song, and then change the EQ from Off to something else, you’ll notice that the volume drops.
By about one bar on the 16-bar on-screen scale.
Reader Butch H.
suggests that this was likely done to address long-standing complaints about iPod and iPhone audio distortion that was evident when the EQs were turned on—specifically, bass distortion used to be extremely obvious at higher volume levels. Rather than improve the audio chip, iPhone 4 appears to be lowering the sound level a little bit before applying the equalization effect.