Iphone 4s Stuck on Headphone mode

So recently my phone has been stuck on headphone mode.  I use the Nike running App and had headphones in during a run.  After I was done and took them out the phone stayed on headphone mode. 

I have did the holding down the home and power button a few times but no luck.  I have tried to clean out the headphone jack with can air to try to get any debris out and the headphone mode will come off for a few minutes but later will switch right back to it.  The sound works fine when then phone is on speaker phone or headphones are in but it will not allow me to have a normal phone convo by listening normally. 

I have also taken the phone to the apple store where the genius guy said I have water damage and I need to buy a new phone for 200 bucks.  I refused to believe this however as my phone hasnt been exposed to water in the least bit so I dont see how that would even be possible.

Any suggestions??

Thanks in advance