Iphone sound problem

I have an Iphone model MA712LL
Modem Firmware 04.05.04_G
As I remembered, a few months ago my phone had application sound, like when I open a shooting game I could hear the gunfire or in a building village game I could hear the BGM
Now my phone can't play sound in application... Ipod still works normally, along with video player
Strange thing is, when I turn on Ipod, play a song, and then turn on a game when the song is still playing, I'll be able to here the in-game sound, along with what the ipod is currently playing...
Another strange thing is, if the game happens to have an opening video, it'll help shut off the ipod, and when the video ends, it goes back to the game WITH sound, which does not happen if I don't turn on Ipod before opening the app, even if there's some kind of in-game movie at start, the movie is also muted
Now I tried flipping the mute switch, back and forth, no use
I tried turn off/on many times, no use
I tried reset the phone in the general menu, no use
I haven't tried reset with Itunes though, because I have paid app in my phone

Another thing, with either position of the mute switch, I don't have ring tone when there's an incoming call.
Trivial fact is that my phone have been throwing around literally by my little brother (3years old)
Any suggestion?