the same tihng happened to my phone. i called Apple they sent me a loaner phone and i sent them my phone. in less than a week they sent me a brand new iPhone. it was still under warranty so i didn't have to pay for anything, not even shipping. i had modded my phone before this happened so i was worried my warranty would b voided but that didn't seem to be an issue.
they should replace. im at college so wen they sent me my new phone they sent it to my college address and not billing address so i don't think it should b a prob for your friends to send it to Apple. u said your not in the us. does that mean your phone is unlocked and on a diff service?