IPhone is no longer a phone.

My iPhone was working fine with only the normal app crashing and stuff like that. However, recently (after updating to 2.0.1) it began acting up during phone calls. You are able to hear the person on the other line, however, they are unable to hear me. The first time it happened I just credited it to lost reception because I was on a ferry. It has worked once after that and it also worked a couple times after I reset it before going back to silence. Now every call is like this. I've tried calling many numbers and have also called the phone from other lines. It takes place during speaker phone, using headphones, and using it normally.
I've tried resetting the phone many times, restored it many times, reset using airplane mode, deleted data, tried messing with the headphone jack, and restarting it.
I'm using an Acer Laptop with Windows Vista Ultimate and iTunes 7.7.

I recently upgraded to the new 3G from the original iPhone. When they were activating the phone all seemed fine and 10 minutes later I had the same problem as you. Lucky for me I was at a restaurant half a block away from the Apple Store. I took it back, they looked at it and gave me a new phone within 5 minutes. They said it was a internal software problem. If you are close to an Apple Store take it back. You do have a year warranty on the phone. The best thing about Apple is that they understand the phone has some bugs to work out. They didn't even question me.. I had to take my original iPhone back as well and the process was hassle free.
Hope this helps.

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