I dropped my phone last month. This wasn’t your normal spill either. As I was taking the phone out of my pocket, I lost my grip; I tried to grab it on its way down, but ended up knocking it upward in the air, causing the resulting impact to be even greater. It bounced a few times on the sidewalk before coming to a rest. The case cracked open right above the ringer switch. Surprisingly, the phone still worked. Well, sort of. I couldn’t switch the phone to silent (since it cracked right above the switch) and I couldn’t stream video. The native YouTube app still worked, but if I tried to watch a streaming video in the browser, say an episode of 30 Rock on NBC’s mobile website, rather than playing the video, it would show the data in Safari–as if the fall broke something in the software.
Anyway, I updated to iPhone OS 3.1.3 today, and video streaming is working again. So if you run into a similar problem, try reinstalling the OS.