I made the mistake of taking my iPhone 3G fly fishing and it died after getting splashed. It was running 4.0.2. I followed the usual recommendations including opening the phone and gently warming it with a air gun on low. There was no apparent moisture inside the phone. While it was open I decided to replace the battery for good measure. Now it is stuck in the Apple logo even after what appeared to be a successful restore with iTunes on a Mac. Got same result after attempting restore on a PC. There were no error messages during the process - just the progress bar across the iPhone and a reboot wherein it remains in the logo loop. I assume something died as a result from the dunking but its strange that it will connect to iTunes and go through the restore cycle. I toyed around with trying to downgrade to 3.1.1 but not sure that will yield any better results. Any suggestions on other things to try or is it toast?
I would try forcing into recovery mode and then restoring again to see if this helps. If not then it would need to be serviced by repair or replacing the device which will not be covered under the warranty due to the liquid.