Just noticed this problem today and a friend of mine has the problem too. It's definitely Hardware issue I'm on iOS 7.1 he's on 6.x and we both are out of warranty sadly but as @threelions says you are covered a little in the UK under Sales of Goods Act.
@threelions You bought the phone from Three which means your contract is with them in terms of the law. Therefore contact them if they say you should take it to Apple you should tell Three no that is their job as you have the sale with them not Apple. Be prepared to fight under the Sales of Goods act. I got a laptop fixed for free under it before. What I would do if I were you, contact three see what they say if they say its out of warranty tell them "Under the Sales of Goods Act I have the right for the phone to be fixed or replaced by the person I bought the product from. (they may keep moaning) So you say, due to the cost of the phone I purchased the phone under the assumption it would last longer than xx months and as it currently stands it is not fit for purpose."
You need to stress the cost, and not fit for purpose. They should really back down then. I got a £300 repair cost on a laptop for free after saying that. The laptop cost about the same as an iPhone too. Also they may try to sell you an extended warranty, stand firm you do not have to pay this at all, unless you want it of course.
@threelions You bought the phone from Three which means your contract is with them in terms of the law. Therefore contact them if they say you should take it to Apple you should tell Three no that is their job as you have the sale with them not Apple. Be prepared to fight under the Sales of Goods act. I got a laptop fixed for free under it before. What I would do if I were you, contact three see what they say if they say its out of warranty tell them "Under the Sales of Goods Act I have the right for the phone to be fixed or replaced by the person I bought the product from. (they may keep moaning) So you say, due to the cost of the phone I purchased the phone under the assumption it would last longer than xx months and as it currently stands it is not fit for purpose."
You need to stress the cost, and not fit for purpose. They should really back down then. I got a £300 repair cost on a laptop for free after saying that. The laptop cost about the same as an iPhone too. Also they may try to sell you an extended warranty, stand firm you do not have to pay this at all, unless you want it of course.