I got mine replaced.
I first had an appointment, showed the triage person.. they checked my phone, recreated the issue. Checked my warranty status - phone was out of warranty by 3 months. Told me they could not help me and I would have to pay £135 for a replacement. Disgruntled, I left the store.
I got a followup email asking how the appointment went: I told them, very badly. Explained that I had read many forums where people provided anecdotal evidence that their phone was replaced out of warranty and that I found it unacceptable that mine was not replaced.
I got a followup call from someone on the Genius bar at the store I went to who offered to 'meet me half way on the price' so it would cost £75 ish. I said no, this was still unacceptable. The chap then said he would arrange an appointment for me to come in to get the phone replaced (to rebuild the relationship as he put it) This was after I told him that I have every single iPhone from the 2G and they ALL still work perfectly. Told him my 4 year old 2G iPhone works better than my iPhone 4 😀
I got a replacement handset. 😎