Personally, I would go the Apple store route if I had to, and be honest with them. Sometimes you can luck out, and they will be kind enough to swap you for free, worst case, they will charge you a fixed rate to replace the phone. (150 or 200USD, if memory serves) FYI, the out-right purchase cost of the phone is up to $750.00 (as of the 4, the 4S may be higher) - the providers subsidize heavily, so in that light, the 150-200 isn't as bad as it appears. To reiterate, don't lie about it, both Apple and the people you bought it from, know about the water-sensors, and where to look.
That said, if your phone survives this, it'll likely be fine indefinitely. Providing you do not power it back on or charge it while there is still water inside. The electrical short caused by water exposure will crash it, but very unlikely to kill it. It's electrolysis (acidification of the water which then corrodes the internals) that actually causes permanent damage. Remove the water, and the electrolysis is stopped.