I rang Apple in the end and they asked me to trey some things.
When I restored my phone I restored it to the backups I'd already created and the problem still persisted. Apple wanted to establish if it was a hardware or software fault.
They asked me to restore the phone, then setup as a new phone rather then from my backup. I now dont have the problem with the blue lines (mine was also crashing erratically again like you said yours is)
Apple beleieve something was corrupt within my backup and there was no way to fix it. I had to just backup what I could (contacts should be in iCloud etc) and with my photos i downloaded them to iphoto on my Mac. On a PC you'd have to transfer them somewhere else.
Just make sure anything important is saved either to get them automatically redownloaded from iCloud or somewhere else. You cannot use the whole phone backup or the problem may return.
I then restored my phone to brand new settings. Lost all my old messages etc but this was the only way of fixing it they said. You can then re download your apps and music etc through itunes. Took a couple of hours, and to be hpnest my phone did need a good sorting out so wasn't too bad a thing! Loads more memory now as well!
Hope that helps.
FYI This is what was happening to my phone... THe blue band would move from side to side across the screen...