iphone 3g not displaying screen

please help while at work i unfortunately dropped my iphone and it landed face down into the ground
on my tea break i found that my iphone display would not show up when iused my phone
to be specific no matter what i would do (restarting included) all that would display was the white backlight of the iphone ....
as i discovered throughout the week eveything else was working as i could hear my text tones (tritone) when i recieved a text
i took it into my local optus store (i am austrailan) and they sent it into apple to be repaired under warenty ....
i have just recieved the unfortunate news that apple was unable to repair it under warenty as it suposedly has water damage (even tho it as never been exposed to water) is there any way to fix ths problem or anyone trusted i could send it into that deals with "water damaged" iphones
PLEASE HELP!!
also do apple replace the iphone?
does anyonw know the price it would be to replace my iphon with apple?
iphone 3g 16G (black)

 

please somebody help me