He didn't say he needed a phone, he was inquiring about fixing a 3GS. I make this assumption because he offered up the alternative to buy an iPod.
With all that said, as the other posted suggested go to a Genius and worst case you get a quote for repairs and can compare that to the cost of an iPod Touch. I haven't looked lately to see what they're selling for on ebay/craigslist/etc.
My iPhone 3GS had battery problems and I took it to the Apple Store and even though it was out of warranty, for $85 they gave me a new one. It is still a great phone. Let's see you do that with an out of warranty android phone.