For those of you who do not have warranty or insurance, there is a fix for this.
I just got done with re assembling the phone after a fix I performed. It is real easy to do.
Things you need:
-A screwdriver (whatever the size is when you open the back cover, the four screws you see, that size)
-A small flat head screwdriver if you have one (not necessary but would help)
-Patience and some common sense.
Ok, to start off follow these steps http://forum.xda-developers.com/showthread.php?t=740022
to open the first 6 screws and then how to pop open the screen from the bezel(this is when a flat head screwdriver would be useful).
(go just to the step till the fifth picture in that thread, no need to go beyond that opening things!)
Now, you would see a screw on the left of the speaker. Now, other threads said that by loosening that screw the speaker would work. But, I did that and still had issues so I opened the phone like 4 times in total before I found out what it was. Now, notice that the speaker unit has a cable (orange colored) running into the main phone chip. It is connected there through which it functions. When you open that above mentioned thread to open the phone there is a picture showing to remove the that belt from the board. Follow that instructions, flip that tiny black clip up to remove the belt. In some cases there might be a blue sticker kind of thing on the belt, just take off that sticker. The problem seems that the belt is loosing contact which doesn't allow the speaker to get the sound input to put out sound through the speaker. So, take off the belt by flipping that switch and re insert it out there. Try to push it in properly or enough to align a white line on the belt and the chip. There is a white line to guide us there. That line should be totally straight when the belt is inserted appropriately. And now, flip that clip down and lock it. If you have loosened the screw left to the speaker, put it back in in normal force not excessive(no need to be more gentle here). You cannot leave it loose because it makes the whole unit move when it is loose eventually pulling off the belt from its place which causes the sound cut outs. The whole trick is to get the belt right in its place. So, make sure it is tight but not extra tight after you have managed to get the belt right. Put everything back together and now when you screw the last 6 screws again, the one in the top speaker corner affects the speaker unit, so don't push it too hard in. Just normal screwing. The rest should be done properly with normal force. This should solve it. I figured this out after opening the phone 4 times. And now playing songs since the past 6 hours non stop and its back in action again!
For all this, i did put in the battery and start the phone when I had opened it and tried messing around and figured out what was killing the sound, so this should be the ultimate solution to it. There is nothing else that can be affecting it now.
Most people must had faced this because they dropped their phones before which made the belt to move and hence the loose contacts inside. If not then, there are high chances that you bought it from someone or somewhere who had dropped it before!
Well that's it! Also, don't freak out in having to open the phone. You should just go to the step till the fifth picture. Which is very easily achievable!
Go, have fun with your WORKING speakers now!