iPhone 3G GPS is unreliable; seems to use assisted-gps only
The prelonged stern look didn't work??? Lol 

I see that you tried restoring from a backup. Try restoring to stock software instead of your saved backup and see how it works. I've noticed that sometimes erratic behavior is caused by corrupted files within the actual backup image.

If that doesn't work, try taking it in for service...I really don't think that's necessary though.

Hope this helps!