Make an appointment with an Apple Store and see what they say. They've been known to replace handsets FOC on a one off basis, even when it's clearly accidental damage.
Worth a try, all they can do is say no, or tell you that a replacement handset will be around £120.
However if you are willing to try it yourself, so long as you don't mind fiddly electronics and have good levels of patience, it's really not that difficult. I replaced the home button in mine and whilst it was quite fiddly, I would happily do it again.
EDIT - take a look here for awesome instructions if you fancy having a crack yourself...
http://www.ifixit.com/Guide/Installing-iPhone-4-Display-Assembly/3148/1