IPhone "Dead Strip"... and what to do now?

Question

Hey there,
My first generation, Edge iPhone has a "dead strip." Basically, the horizontal row where the "7" "8" and "9" appear on the "Enter Passcode" screen no longer recognizes any touching. Any at all. Honestly, thank God that my passcode doesn't use any of those numbers... If not I wouldn't even be able to log in.
I first noticed the lack of touch recognition about 2 months ago, but the "dead strip" wasn't as tall as it is now. "Tall" being the height of the strip... it's "width" always encompassed the entire horizontal rule of the iPhone's screen, and still does. I noticed it when scrolling web pages, since when my finger got to the old, less tall strip the web page would stop scrolling (thinking I had lifted my finger, I suppose). It wasn't that bothersome... until the strip just kept getting larger ("taller"). The "dead strip" has kept growing in size.
Now that the strip has grown to a large "dead strip," I can no longer write anything with my iPhone's keyboard. It renders e-mail, web and text useless (not to mention any application, etc. that has input buttons placed in said "dead strip"). I've even tried getting around the e-mail problem with EasyWriter, and have had good results. EasyWriter gives one the ability to craft an e-mail with its application... using a horizontal keyboard. So, unlike with the default iPhone e-mail program where I'm stuck not being able to touch certain letters, EasyWriter allows me to keep rotating the display until the letter I want is in a non-"dead strip" location. It works... but, boy, is it tedious and time consuming. Though EasyWriter still does nothing for web and text input issues. Not EasyWriter's fault, just saying that I can't use it as a work-around to the "dead strip."
I took my iPhone to the Apple store on Chicago's Michigan Avenue last week and all they could say was "out of warranty... refurbish for $199." My iPhone has zero physical damage, so I'm pretty ticked... but I understand that nothing can be warranted forever. (But I bought mine on launch day, so I personally think that less than 1.5 years is pathetic to not warrant, however. This is about quality of manufacturing, in my opinion.)
My question to the forum is this: is there still a market for first generation, Edge iPhones? I thought I'd read that as a resale... they were more preferable than the 3G iPhones.
Thea reason I ask is that since it's "out of warranty" I can either get a refurbished first generation, Edge iPhone for $199 or upgrade to a 3G for $199... though that 3G's phone plan would cost me $15/month more as well (keeping the same wireless/text plan that I have now).
If I go the refurbished, first generation, Edge route (for monthly pricing reasons)... will I be able to resell it at some point in the near future, when I am ready to upgrade to a 3G? Are the first generation, Edge iPhones still selling online for more than the $199 it would cost me?
Or... even better, is there anything which I can make a case for, that would just have Apple swap it out for me? This would be the best route, since I literally have treated this thing gallantly and in a case for its entire existence. So, to me it's bad craftsmanship that has brought this on.
Thanks

Answer 1

Tamara,
Thank you for the feedback. Do people actually buy iPhones with "dead strips?" On second thought, since I could use it as a second Sonos controller, I'd like to get it fixed after I purchase a new iPhone. Can you steer me in the right direction, to get it fixed? Website(s)?
And as a small side note, AppleCare wasn't available on launch-day purchased iPhones until some months afterwards... so, by the time that it came out, I wasn't mindful of remembering to go and get it.
Thanks again
Message was edited by: Arturo Pena