I think I know what's going on here. I have seen this problem many times already, and made a thread about it: http://www.hackint0sh.org/forum/showthread.php?t=24846

Looks like there's a chip on the iPhone logic board that gets shorted when you plug it into the wrong charger. iPods historically have been tolerant of cheap chargers that don't match the voltage/current perfectly, but the iPhone can't tolerate it. This thread has more info on the problem: http://www.hackint0sh.org/forum/showthread.php?t=19204

Replacing the logic board seems to be the simplest way to fix the problem. If you have the skill/tools, you could also replace the Apple 338S0459 chip on the logic board. Letting it run too hot for too long will cause widespread damage, however.

This is starting to look like a serious problem, and people need to be made aware of it since 9 times out of 10 it will void your warranty with that "Repair Needed" message. A sticky, perhaps?

TheSacredSoul,

Did you use the Firewire cable to charge your iphone ?

I think we finally have a definitive answer to this problem: It is the firewire charging circuit that is causing this issue.