Yeah, that iPhone 4, a complete failure. Apple has only sold what, 10 or 12 of them? Oh, there was a long waiting period for them? Who would have thought it.
Mute button is working fine on my iPad, if I turn it on it stops the system sounds from playing and interrupting when I'm listening to music, watching a TV show or movie, or even reading a book. Just like it is supposed to do.
What is yours doing?