What should I do?

Hey all...first time poster, and I came to ask some advice.

My friend has, or I guess I should say he had, the 8G iPhone. The day before yesterday he got it wet and it has sustained water damage. According to him the only things that are wrong with it are:

A) The text message button doesn't work
B) You have to press a person's name "like 30 times" from the contact list in order to place a call to them
C) Sometimes the phone will turn itself off when coming back from sleep mode

So here comes the question. I've never had an iPhone and he is offering to sell it to me for $100. I understand that you can send the phone into Apple to be fixed for $200 or so? So it would be like I got an (almost) brand new iPhone for around $300? Am I correct? Should I do this?

Thanks guys