iPhones White Apple of Death Pls help 3G

Greetings.
Just yesterday, my iPhone started to respond slowly, taking ages to open any default app, etc.
so I restarted the device.
However, during booting, the iPhone cant get past Apples white logo and eventually shows up that loading circle going on...until a white flash comes in and the device reboots again...and this goes on forever and ever...
I tried to restore but after it the device continues to freeze in the same way and iTunes says that my SIM Card is not recognized or requires a PIN..etc.
Of course I cant enter a PIN because the device is frozen on the logo.
I googled up quite a bit and tried DFU restore and the same thing. The White Apple of Death continues and the iTunes displays the SIM not recognized or insert PIN message.
I bought the iPhone with the official reseller in Portugal (Vodafone) and payed them to legally unlock it so I could use with my favorite portuguese operator. Plus, Ive never jailedbroken or whatever the iPhone.
I dont believe that this is a SIM unlocking problem (ie insert an AT&T SIM Card), because in that case the device would pass the logo and show a different msg.
Ive tried to restore in a different Mac and in a different PC.
I even browse through the device with DiskAid and renamed watchdog so that it allowed the SpringBoard to load everything before the 2-min deadline (Ive read about this somewhere...), but no use...
Could someone please give me any lights on this?
Is it an hardware issue? Im quite far from the closest Vodafone store (and not sure if they could solve this anyway to be frank or would they send the device to repair in Apple and Id be without it for quite a long time) so I was trying to figure it out before making such journey.
Thanks for your help.
Best regards
-Miguel
iPhone 3G 8Gb iPhone OS 3.1.2