A study conducted by SquareTrade shows that over 30% of iPhones fail after 2 years, mostly as a result of accidental damage. The company, the largest provider of independent warranty coverage in the world, found that 65% of the damage was the result of a dropped device which lead to a broken and unusable screen. Water damage accounted for 25% of the damaged handsets. Of those iPhone models that suffered water damage, the phone usually got wet from being dropped in a drink or in the toilet. After 9 months of data received from users of the iPhone 3G, that version of Apple's touchscreen phone had a malfunction rate 40% lower than that of the first-gen model.
source:
SquareTrade