IPhone 3G with 3.0 software stuck in Recovery...

my iphone problem is this...
My phone was displaying this message...
Even if i had nothing connected to it.
Then, it would jump back to the springboard, and not let me do anything really. then it stayed stuck in the SMS app. Finally it asked me to connect to itunes, and i had to restore. now it keeps telling me to restore even after i've wiped it and "restored" it. Battery didnt charge anymore either
I took it to apple and the 'genius' at the one of the local apple stores said i need to purchase a new one. Said there was water damage to the phone, but the water damage sensors that proves water damage is unchanged/unaffected. Also said there was 'rust' on the dock connector. There was some kind of grime...but no rust. He then proceeded to use some tools to "wipe" the contacts of the dock port. as well as an xacto knife.
so all in all the verdict is that i NEED to buy a new phone. no free replacements for me. The guy wasnt even really helpful. cut me off whenever i tried to explain a symptom.
What can i do? Apple wants me to buy a new phone from them. But i'm a poor college kid...what can i do?

You should post this at the Developer forums provided for the 3.0 BETA. Registered Developers have access to those forums.

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