My friend at work had a problem with her iPhone 4, took it into Brightstar or whatever they are called and straight away said it was water damaged and it would cost $385 to fix.  She said that she would think about it and took it home.  The next day she was venting it out to me at work about how much it would cost to fix.  The problem was that it was stuck on the start up scren, the one where you first have to connect it to activate it.  I said told her that i had the same problem one day and found out if you take the sim cardout and connect it, it would fix it. 
She followed my directions and hey presto, it worked again.

So how sh*t are they for trying to charge her that ammount of money.  If anyone wasn't worried of this whole 'water damage' false claim to make more money, this is one story to make you so.