Very Strange Touchscreen Issue

I recieved and activated my new 8GB iPhone about two days ago and it worked great up until just a few hours ago. I am experiencing the known issue of the bottom 1/2 inch or so of the touchscreen not responding to my touch, which in turn is affecting a lot of main elements of the phone such as SMS, e-mail, iPod, etc. Among that issue, I also encountered a very strange occurrence whilst I was testing the 'dead zone' on my iPhone: Certain sections of the dead zone work if I hover my finger about 2 -3 centimeters from the screen. It is a very strange thing but true, lol. I can even capture video footage of this if it's necessary.
Since I bought my iPhone from an AT&T store, should I return it to them for a new one on the spot or should I do it through Apple? I hope it doesn't come down to the latter since I do not live anywhere near an Apple Store (New Orleans, LA) and I just switched from T-Mobile to AT&T so I'd really hate to purchase a cheap temporary phone while my iPhone is being replaced/fixed.
Edit: Have a Merry Christmas, everyone!
Message was edited by: Fiyerstorm

I just talked to Apple Support and they are going to repair it for me, it's just I need to wait til Friday since I am broke from Christmas! Once I get paid, then I can dish out the 30 dollars to get a rental iPhone to hold me over. The restore temporarily fixed the touchscreen issue since it happened again hours later.
Also, nobody I know who would have a spare AT&T phone doesn't come to mind so I can't just borrow a phone and start the repair process now, but the wait isn't too bad. At least they do not limit the iPhone rental to just physical Apple Store customers!
Thanks for the help, folks. :V

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