Like Radar O'Reily on the hit television series MASH said his mom would say: It's better to hold the phone than get a kidney stone.
If I was talking with someone on the phone and realized they were using the bathroom, it'd gross me out. I think it's just plain rude to chat when something so personal is happening like using the toilet or having sexual relations. Even if it's an "important call," the other person will surely understand if you tell them you're unavailable at the moment and will call them right back.
I called this old acquaintance from highschool one time and it sounded like he was masturbating while talking to me. Whatever he was doing, his breathing pattern sounded creepy as Hell. If your breathing is heavy because of something like jogging, tell the person on the other end that you're winded.
Even chewing food while on the phone is rude. And calling someone while driving is just plain dangerous.
Basically, when speaking on the phone, people like to think they are the most important thing to the other person at the moment; the term "undivided attention" comes to mind.
These days with mobile phones and their precious minutes, people also don't want to wait around for you to finish doing whatever is distracting you.
Oh, and people really seem to hate talking to a speaker phone -- even threatening to hang up -- lest you pick up the receiver. Another feature with the potential for abuse is three-way calling; for example, having someone hide on the other line while discussing them with their partner.
One final word of caution is that some states have stupid laws preventing recording a phone call without the other person's knowledge. Washington, DC is one such place.