There is an app that adjusts the sensor positioning when you touch the screen. So if you have a small area (say on the lower 1/8th of your screen common on 2G for example) you can adjust the digitizer to make it actually sense the touch and position it slightly under (or above) where your finger is actually touching on the screen.
This is not the greatest solution obviously, but might help some people that only have a narrow horizontal band that is dead. If you move it too much from the true original positioning though, it makes typing on the keyboard a real pain!
More info and the needed plist files are at the link below. Look at the page carefully, it was originally talking about older firmwares, but there are plist downloads for 3.0. I actually used it on a 2G running 3.0.1 and it worked fine. Oddly the article says this tool adjusts sensitivity of the digitizer, but I didn't find that to be the case. It is actually more of a positioning tool from what I could tell.
iPhone Touchscreen Fix: Increase Sensitivity
BTW I actually used iPhone browser to copy the 2 plist files into the appropriate directory, made it quick and easy. These plist files will add a "Touch" category within your general settings menu that lets you easily make the adjustment to your digitizer. It also has and area of test sliders within the tool to help you tweak the settings easily.
Hope this helps!