One of the notable features missing from the iPhone 4 is the ability to put a call on hold. The Hold button was replaced by the new FaceTime feature on the iPhone 4, but it hasn’t gone away. Turns out if you tap and hold the Mute button while on a call it will put the call on hold. Tapping the Mute button quickly, will just mute the call, as you would expect. Tapping the button again will take the call off mute or hold. Great find.
iPhone 4: Finding the Hidden Hold Button [The Mac Observer]
I almost never use the phone on my iPhone. Is there a real difference between mute and hold?
yes,
mute lets you hear them while they cannot hear you, hold puts the call on hold so neither party can hear anything.