A bit late of a reply I know, but i've not had connection drops in the middle of my COD4 games. Ok, I've had the odd network hicup now and again but nothing to write home about. I've had the odd server timeout, host ended game, game lobby closed etc. The main issue with a lot of the 'errors', is it's effectively P2P, with one player being the host. So if the host player ends the game, it ends for everyone else. Apparantly IW are fixing this in an update.
I did have major issues when it was first released, and also soon after the 360's firmware update last week, but these were probably XBL lissues (which for some reason makes the game lock up). I don't know how Infinity Ward measure the connections, but generally my connection strength is; Three bars when someone else is the host and i'm connecting to them, Four bars when I'm the host. Also most players are up to the full four bars when they connect to me, strange.