Why do I lose service when 3G is on?

I have a iPhone 3GS and when I turn on the 3G from the settings menu I loose all service, no bars and no internet. To get back servic I must go into the setting menu turn of the 3G and restart the phone. Once this happens I get back my calling service as well as the ability for WiFi and normal mobile internet. I have tried a to restart to factory settings and also a new sim card but neither of these have worked.