IPhone 4 - Calls connect, but neither party can hear each other

What is odd, is that when the call is placed, i see the 'speaker' button illuminated, which is not normal. I've tried to plug a speaker jack into the port and unplug it to try and clear any issue there, but that does not work. Suggestions?

I am having the EXACT same problem! I have no idea why! I tried restoring my phone but that didn't work either! I thought it was odd how the speaker button was illuminated. Guess I'll be calling Apple in the morning!

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