I just had this problem tonight. The screw holding in the battery on an iPhone4 is easily stripped. After trying everything I could think of and searching online for a solution, I ended up breaking out my electric drill and a drill bit slightly larger than the hole in the stripped screw.
I set the drill to turn in the same direction as will unscrew the screw, and carefully placed the bit on the screw -holding very carefully of course- and hit power. At first the bit didn't seem to be doing anything, but as soon as it caught in the screw hole the torque just spun the screw right out.
I replaced the battery and didn't have another screw to put in so for now I've left it out until I can order a replacement. Phone works fine.
If you're frustrated enough to try this yourself, hopefully it works for you as it did for me.