Good News...I fixed it!
Everyday I listen to my iPod on the train and use the headphones as my conversation device too. For some reason, when my headphones were plugged in, it would play music, but when I took them out it wouldn't play through the iPhone. Therefore with this and the fact that the iPhone only worked on speaker (speaker works when headphones are plugged in normally) I determined that it had to have something to do with the iPod/earbuds/headphone jack.
To fix it, I opened the iPod application and plugged the buds in, started playing music, then paused it. I then removed the buds and pressed play and it played through the phone and also allowed me to hear a conversation the standard way (up to the ear). On the today, I must have unplugged it while it was still playing and messed something up...not sure why that would mess things up, but it must be a small bug. I tried the same thing again that I did on the train and it is still working so I feel pretty safe..just a minor hiccup. I'm glad I got it working so quickly and didn't waste too much time!
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*huge sigh of relief*
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