iPhone 4 wireless network connects to my neighbors networks but not mine

If your iPhone is able to connect to every other wireless network you have access to except for your network, this leans toward there being a problem with your wireless network or router. If a problem with your iPhone, you wouldnt be able to connect to any wireless network.
Have you checked the manufacturers website for your wireless router to see if there is a firmware update available for your wireless router that you havent installed yet?
What type of encryption/security are you using with your wireless network - WEP or WPA2?
Did you transfer the backup for your 3G to your iPhone 4? If so, try resetting network settings on your iPhone first. This will erase all wireless network settings from your iPhone. If no change after this and you transferred the backup for your 3G to your iPhone 4, try restoring your iPhone 4 with iTunes as a new iPhone or not from your iPhones backup.
 MacBook Pro 15" Intel Core 2 Duo/2.53GHz/4GB RAM/500GB HD Mac OS X (10.6.4)  iPod w/Video 30GB,  iPhone 4 32GB

I have 5 devices connected to this router. Nothing wrong with the network. Strangely my neighbors networks are protected and need a password! So technically it should give me a incorrect password. But it does not.
Also now I tried restoring my device and lost my applications. iPhone 4 is starting to look like it has a LOT of bugs. Released untested.
Toshiba Windows 7

Baloney - the release was certainly tested. Each release is tested by 3rd party app developers before being released to the general public. No such problem with my iPhone 4 since day one purchased on the release date with a number of different wi-fi networks I regularly connect my iPhone with. Some encrypted and password protected, and others not. If not tested, I wouldnt be able to connect to any of the number of wi-fi networks I have access to and regularly connect my iPhone with. If there was a problem with your iPhone, you wouldnt be able to connect to ANY wi-fi network including the network at the Apple store. And if a diagnostic check was run on your iPhone, it would have detected if there is a hardware problem with the wireless card or with something else.
I have 5 devices connected to this router. Nothing wrong with the network.
This does not answer my question.
Have you checked the manufacturers website for your wireless router to see if there is a firmware update available for your wireless router that you havent installed yet?
Strangely my neighbors networks are protected and need a password! So technically it should give me a incorrect password. But it does not.
Does this mean you dont know the password for your neighbors wireless network - you are entering a random password and your iPhone is connected to the network which provides internet access?
Also now I tried restoring my device and lost my applications.
All apps on your iPhone should be in your iTunes library on your computer. If you have Sync Apps selected under the Apps tab for your iPhone sync preferences with iTunes which should be selected, after downloading an app with your iPhone the app will be copied to your iTunes library the first time you sync your iPhone with iTunes after doing so. This also provides for downloading an app with iTunes on your computer and installing the app on your iPhone via the iTunes sync process. This also provides for removing an app from your iPhone without deleting the app by deselecting the app under the Apps tab followed by a sync. To re-install the app later, reselect the app under the Apps tab followed by a sync.
All iTunes content on your iPhone including 3rd party apps should be in your iTunes library on your computer.
When restoring an iPhone with iTunes, the iPhone is completely erased first followed by the firmware being re-installed. After the firmware is re-installed, you are prompted to restore from your iPhones backup (which is the default selection), or as a new iPhone or not from your iPhones backup. Either way this must be followed by a sync to re-transfer your selections under the various tabs for your iPhone sync preferences with iTunes (with your selections under the various tabs for your iPhone sync preferences pre-selected when restoring from your iPhones backup) or your selections under the various tabs must be re-selected when restoring as a new iPhone or not from your iPhones backup. Either way, all apps that were on your iPhone should be in your iTunes library on your computer.
Since you must not have Sync Apps selected under the Apps tab, you can re-download all apps with iTunes that were on your iPhone before restoring that are not in your iTunes library on your computer
and you wont be charged again for a purchased app as long as you use the same iTunes account to re-download the app that was used to purchase the app originally.
Does this mean you restored your iPhone with iTunes as a new iPhone or not from your iPhones backup?
 MacBook Pro 15" Intel Core 2 Duo/2.53GHz/4GB RAM/500GB HD Mac OS X (10.6.4)  iPod w/Video 30GB,  iPhone 4 32GB

Not Baloney mister, a fact and it is my iPhone and I want Apple to provide me with answers. If you want i will send you the video i created that shows the behavior. I also can send you the snap shot of the error messages.
Toshiba Windows 7

It is certainly not a fact that the release was untested. If that were the case and is definitely a problem with the release, then every iPhone 4 owner would be experiencing the same including with my iPhone 4, which is not the case.
What error messages? You didnt mention any error messages with your original post.
And this still does not answer my questions.
Have you checked the manufacturers website for your wireless router to see if there is a firmware update available for your wireless router that you havent installed yet?
What type of encryption/security are you using with your wireless network - WEP or WPA2?
Did you transfer the backup for your 3G to your iPhone 4?
Does this mean you restored your iPhone with iTunes as a new iPhone or not from your iPhones backup?
 MacBook Pro 15" Intel Core 2 Duo/2.53GHz/4GB RAM/500GB HD Mac OS X (10.6.4)  iPod w/Video 30GB,  iPhone 4 32GB