Iphone 4 no sound at all during calls

I recently purchased an iPhone 4. I found that everything was working great, apps worked sound worked and music etc. I was very happy with my purchase until i made my first phone call. Whenever i recieve or make a phone call there is no sound apart from a faint crackling at all. The person on the other end can not hear me ether. It doesn't work when the headphones are in or when it is on load speaker also, which is making me believe it is a software issue, not a hardware issue? I have read that when making calls the phone uses seperate speakers, but surely this wouldn't affect headphones and loud speaker as well?
I have restored many times on 5.0.1 with no luck, rebooted, reset settings and nothing seems to work. There is no way i can downgrade to see if it is software issue :/
I can't take it to apple because the warrenty has ran out.
If anyone can offer any help it would be greatly appreciated!!

Seems like your choices are to either restore as new (see http://support.apple.com/kb/HT4137) or have the Apple Store evaluate it to see if it's a hardware issue first.  If you choose to restore as new be sure to save any Camera Roll photos to your computer (see http://support.apple.com/kb/HT4083) and backup your contacts, either in a supported client (Outlook 2003/2007/2010, Mac Address Book, etc) or using an app like My Contacts Backup, before wiping your phone since these are not included in your iTunes library.  Good luck!

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