iPhone 2G Touch Screen Problem

Well, the standard troubleshooting is to power off/on, then the reset, then the restore, first from a backup, then as a new phone, or not from a backup. If you have followed all of them, there is really no alternative, since you say it is an original phone. I would try and limp through it and see if they announce a new phone this summer and you can try and upgrade. If, however, you cannot afford to upgrade, then Apple has an out of warranty (OOW) replacement program for $199+tax. Good luck.

When you say you need to restart the phone, are you talking about powering it off/on again, or are you referring to a reset (home/power button)? If you are just referring to a power off/on, then the next step is a reset, hold the power and home button together until you see the Apple logo and release, ignoring the slide to power off screen.