A bit often old thread, but was curious if anyone has anything new to add - a close friend of mine had an iPhone 4S with a non-functioning home button. Genius #1 said the Dock Connector LCI was red, so $199 please. She said she was going to think about it, and it started working a few hours later. She made an appointment the next day anyway to get a bit of clarification and/or if it started acting up again. I went back with her and Genius #2 said it was tripped (not the headphone one though) and there was nothing they could do. I asked about "false positives" and he gave some story about leaving his iPhone in the bathroom while showering and not tripping it and she must've got her phone wet.
Needless to say, she was a bit frustrated with her experience, and I was puzzled since I could've sworn Apple did a 180° on their LCI policy, especially if it doesn't seem like it was completely submerged.
So, we'll chalk her home button up to something weird (she's a huge Apple geek and is probably more careful with her toys than I am), but I had a really sour taste after that visit to our local Apple Store (about two years ago I got the run-around there for splotches on my MacBook Pro's LCD and aluminum pitting when calling Apple's 800 number and sending it to Texas did the trick with no questions asked).