No Service problem iPhone 3G

Hi, I am from India. I have an iPhone 3G from vodafone. It was working very fine until i noticed that suddenly the signal bars drop from full signal to zero and then it goes in searching mode and ultimately gives no service. There are no issues with sim card and network here because in other mobiles the same simcard works with full signal. I tried to restore the same for about more than 10 times now. Initally it took half an hour for the phone to activate as there is no service, then after activation too the signal drops. Wen you get signal and you make a call or text, the signal drops to no service? Is it some issue with the hardware? Please guide me in this regard.
Thanks.
HP Compaq nx7300 Windows XP