Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.
Bad luck

Happend to my 3G (jailbroken) after I restored it (IN IPHONE SETTINGS !)
Toke it to apple store they restored it but device was sooooo slow after that.
Sell the phone or get it replaced if that happens to you
 
I've had this issue before and the only way I got around it was to place the iphone into DFU mode and use a PC with Win7 iTunes to restore the phone. For some reason none of my macs could do it.
 
Register on MacRumors! This sidebar will go away, and you'll see fewer ads.