You should have left it too dry a bit longer than 2 days, closer to a week is recommended. I recently dropped my cell into a toilet and I put it into a bag of rice for 5-6 days and it booted right up, the screen was just blotchy. To me, it sounds like you might have fried something/shorted it out turning it back on so fast. Oh, I also dropped my ipod tough 4g, now the battery life absolutely sucks on it. So yes, getting it wet can ruin that component.

Mark Pence, as with any device that got submerged, you will have to clean it in order to prevent later failure due to corrosion. Check this guide. It was written for a 3G but applies to your phone as well. Clean it thouroughly or risk failure later on;-) The LiIon battery absolutely do not like any humidity and can even react violently with it. These are smart cell device that will have to be replaced due to the possibility of a short circuit. Clean your phone, replace the battery and re-evaluate for any damage. Hope this helps, good luck.

Mark Pence, oldturkey03's right. I just helped fix my friend's iPhone 4 that took a swim in the ocean. What I did to clean out the sea water and corrosion was to submerge the whole phone (minus the battery) and later the logic board only in 99% isopropyl alcohol. That will help clean the contacts and draw the water out of the iPhone. I left the phone in the alcohol for about 1 day. It works perfectly now - I have been testing it for days and it is just as new. As for the battery, I think you'll need a new one. They're only $25 at iFixit, so it isn't too much to swallow. I put a link to the battery:

iPhone 4 Replacement Battery