Chosen Solution
The slider to unlock my iphone 3G 16GB is not working. When trying to power off, the slider to shut down the iphone works but after reboot the slider to unlock doesn’t work. Update Replaced with glass & digitizer and it now works. However, I had sound issues where I could only hear calls through the speakerphone and not through the phone. After reading articles on the web, I will try pluggin in and unpluggin the head set to see if that works.
This is a bad digitizer or loose cable. Reconnect it first and see what happens. If this still happens, replace the digitizer. You can find the guide here. The part is in the parts and tools list.
The next step is to, first backup (if possible), then restore it.