Don't put anything into that little hole next to the audio jack. It is - as was pointed out earlier - a microphone. The top microphone is used in two ways - 1) as the ambient noise cancellation mike for normal handset phone conversations, and 2) as the (only) microphone for speakerphone or facetime conversations.
Try this - call your home phone from your iPhone. Don't use speakerphone mode on the iPhone. While listening on your home phone, scratch your finger across the bottom mike on the left side of the iPhone and you will hear it loudly in your home phone. Scratch the top one and you won't hear it. If the TV is running in the background you won't hear it on your home phone, but if you cover the top mike hole you will then hear the TV on your home phone. Now engage speaker phone mode on the iPhone, and the top mike is the source of sound - cover it and all sound goes away. The bottom mike in speaker phone mode seems to do nothing.