IPhone 3G isn't finding my Wifi unless right next to the router. When moved downstairs, it loses connection and is unable to find wifi. Help please?

I have an iPhone 3GS 8GB that works perfectly and finds my WiFi no problem wherever I am in my house. My mother, however, has just brought an iPhone 3G 8GB that cannot find our WiFi unless it is within a metre of the router
I phoned Apple and the woman on the phone said to reset the router and modem, done that but I still have the same problem. She also suggested about updating the iPhone 3G, but iTunes is telling me that its software is up to date .... "This version of the iPhone software (4.2.1) is the current version"
My iTunes is also up to date (version 10.6.3.25)
I have also tried resetting the network settings on the phone, turning the WiFi on and off on the phone and turning it on and off (someone said that might have worked)
Has anyone came across this problem before? And if so, how can I fix it?

Orwalsh89 wrote:
The case has always been on and it hasn't been an issue before. I tried it just to be sure but the issue persists. There's also no authorised service providers in Dublin, Ireland according to the apple website. Phone wasn't bought with a contract so my service provider wouldn't help me out there either. Looks like a repair costs 250 bucks? If the antenna is still working when i'm next to the router does that just mean it's come loose or something? Should I look into replacing or repairing it myself?
The problem could be due to a loose antenna but it's impossible to say for sure.
If you would like to see what a repair to this area would entail see here: https://www.ifixit.com/Guide/iPhone+5+Wi-Fi+Antenna+Replacement/10897
it's not for the faint of heart.

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