Update to my 'problem'...
I had an invisible shield installed on the phone's bezel...and yes it covers that small microphone hole near the headphone...I removed it...now I have no problems with audio with video recording in the Cam app or speakerphone...in my defense the sequence of events was 1) get replacement iphone at apple store, test functions (all worked), 2) go to Best Buy install shield 3) update to 4.1 (phone came with 4.0), test functions, sound didn't "work"...so I assumed it was the software...
Yes even IT 'experts' can have these types of issues lol...
-J.-