Weird background almost like moisture and volume issue.

Hi,
I just got my iPad 2 days ago and everything seem to be working fine. Luckily I didn't have any wifi issues. I've kept it in good condition, away from kids, heat, water charged it to full every night and did frequent backups. Today while playing Fieldrunners my ipad decided to freeze on me. When I try to raise the volume it would take a picture. When I hit the home button it would take a picture. I had to do a hard reset holding the home and power button and doing it again to shut it off. Upon starting up the ipad, it kept showing the apple logo and going back to black screen. So I had to completly shut it off and plug it to a charger.
What happened? http://sphotos.ak.fbcdn.net/hphotos-ak-ash1/hs533.ash1/3125410150197146075468_651400467_12573980_500794n.jpg

I just had a second opinion with one of my friends who happens to work for cisco systems and he deals with coding and devices all day. I challenge any Apple Genius to debate the issue with my iPad of being water damaged. Here's what he told me from his professional opinion.
He stated that given the fact my iPad was covered with a rubber case grip around, there is no possible way liquid can enter the ipad unless it was dunked in water and held there for a few minutes. However, he did state that moisture is the common cause for liquid damage and a lot of devices. In his professional opinion, he stated that my iPad was exposed to moisture from the air which caused the pad to damage "OVER TIME". Because I was stepping outside the house with the pad and entering the home, the damage was already done and was a matter of time before it showed. Upon turning it on the next day, the pad showed it's damage because; once again "OVER TIME" the liquid settled in from the moisture.
He also told me to contact corporate office and dispute the idea that liquid was spilled on the pad. He also said that if it's that easy for moisture to enter the pad than the product is not of good quality.
I'm sorry to extend all this but I find it hard to believe knowing I never spilled a drop of liquid on the pad and I was told it was water damage. $800 is a lot of money and I'm not ready to give it up. We're not all made of money and for a device this expensive to damage so quickly I would think Apple would want to replace it for me especially being a first time Apple buyer.

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