Wifi Problem after updating to 3.1.2 iPhone 3G

so last week i updated my iphone 3G to firmware 3.1.2, and for a few days everything was fine. Then all of a sudden my iphone stopped connecting to wifi. Now from what ive read there have been several issues similar to this, in which the iphone completely stops detecting wifi (which could mean a malfunctioning wifi antenna), however, in my case the phone still finds networks. At home i can see my network, i just cant connect to it, same with at work and school. The most interesting thing is that i am able to connect to my MBP when its creating a network.
I have tried every troubleshooting measure i can think of, from playing with network setting (eg. static ip, different security, no security) to reformatting the iphone, both restoring from old back up and setting up new phone.
Im just wondering if anyone has experienced this kind of half dead wifi, and if anyone can offer opinions/ solutions, or even just let me know if they think the wifi is completely broken.
Thanks in advance,
PS Im outside of warranty, and ive been told itll be $229.99 to get it fixed, so Im really looking for some kind of answer.
Macbook Pro Mac OS X (10.5.4)