Drop your iPhone...void your warranty!

I've had an iPhone for about a year. I have close to a month left on the manufacturers warranty.

About a month ago, I noticed that the screen was starting to have a white colored burn in the upper left hand corner.

I made an appointment and I took it to the local zoo...er I mean Apple store here in Indianapolis. They said that because of the accidental damage caused to the phone from being dropped, they couldn't warranty the phone. I dropped the phone about two months after I purchased it.

After mentioning this to the "Genius" behind the counter, he spoke to his manager. Still, no deal.

However, while telling me they couldn't replace the phone, they were quick to let me know I could purchase a new one for $199 or if I wanted I could get the new 3G iPhone for $199 as well.

At this point, I told said "Genius" to create me a case and I would deal with Apple corporate. He reluctantly did so.

Anyone out there had this problem before? Any suggestions?