It may be stuck in headphone mode. Plug the headset in and out rapidly several times and see if that will free it and make the speakers work again. You may also want to check all your setting as as well as cleaning your jack as Lint may be trapped in the connection. Try blowing into it or try canned air.

These suggestions have not helped, and you don't want to hard reset your phone. This is what i think worked for me.

1. Plug in headset when iPhone is locked.

2. Hold down the power button so that the "slide to power off" bar appears.

3. Remove the headphones.

4. Push the "Cancel" button at the bottom of the screen.

5. Go to the phonepad and see if pressing the buttons now produces sound.

(It's possible that I've forgotten something that I did, so the next time my phone locks, I'll try the same method again and update this post. Unless someone else is having the problem and wants to verify.)

I recently have this problem too with my iphone 4 which cause by water damage via home button.. many people say it is the headphone jack problem..

but after sending it at the shop for repair, it is actually my dock connector error and got it replace...

the no sound happens because my iphone recognize it as using dock speaker, so it mutes all the sound except ringtones.

so probably you want to have a look at your dock connector.

Plug in and unplug the dock connector. simples! :-)

My Ipod did this and I took a toothpick to clean out the dock connector on the Ipod itself. took a few tries but got it working again, that thing gets dirty!!

Thank you for the "Plug in and unplug the dock connector" advice. It worked.