Can't hear calls on iPhone and they can't hear me

I seem to have a very strange problem with my iPhone 4.

Whenever I make phonecalls, I can't hear the other person talk and they can't hear me. I thought that it had something to do with the ear speaker and the microphone, but even when I put the call on loudspeaker, I still can't hear them talk.

I know that there is nothing wrong with the ear speaker and the microphone on the phone, because when I use Skype on the phone I can hear them clearly through the earpiece and they can clearly hear me through my microphone.

I also know that there is nothing wrong with the loudspeaker, because when I play music on the phone I can hear it clearly.

I have no clue what is wrong, I have tried restoring the phone but it still doesn't work. I have never "jailbroken" or modified the phone in any way so that shouldn't be an issue.

If anybody has any solutions please do let me know, I will try to anything at all!

Thanks

Anish