because of the two black dots, your LCD does need replacing. Right now, Amazon.com has a free trial for AmazonPrime where you can get free two day shipping.. (just make sure to cancel it right after cuz 30 days later, you'll get charged an annual fee of $79) iPhone replacement parts are cheap on Amazon.com and Ebay.com. However, my iPhone 3G has the same problem with inverted colors... I bought a replacement LCD, screen, and digitizer (ALL BRAND NEW) and the screen is still inverted. I haven't quite figured out the cause but I have found out that..
its NOT the LCD.
its NOT the LCD ribbon. (When you buy a new lcd, it comes with a new ribbon already attatched and the problem wasn't fixed.)
My GUESS is that it has to do with the Motherboard itself which is a hefty replacement cost. I am going to look into the cause of the problem and how to fix it. Good luck to ya'll trying to fix your phones as well.. please take my advice and learn from my mistakes.. replacing your screen or lcd will NOT fix this problem.. it is something else.
If you have questions as to how to replace your LCD, i'd be more than happy to give you EASY, foolproof instructions..
If you figure out the cause or how to fix it, please let me know as well.