My wife had he iPad on top of her iPhone and now her iPhone screen looks like an X-ray screen. Any help or ideas would be great.

It's the new x-ray app. Didn't you know about that?

Settings > General > Accessibility > White on Black (or Invert Colors on iOS 6)

Switch it off.

I think this is also the default behaviour for triple-clicking the Home button. That is probably what caused it.