Remove the CPU cooler, should find these slippery, rubbery pads on top of some components. Usually found in HP laptops, lots of them which had AMD CPUs failed easily, and they have this stuff inside. Can be found cheaply. Don't use thermal paste inside the phone, as it gets messy. The silver one is better, but still, inappropriate for use in a phone. I see you're using a Nexus One. You want to apply thermal pads between the QSD8250 chip on the rear side of the board (under metal shield, careful, shields held by copper tape) and the metal shield covering the QSD8250. Put a pad between the metal shield and the phone's display. Careful there, a pad too thick will force the display and break it. Last one, put a pad between the MicroSD slot and the aluminum frame of the phone. There already is a small pad there. Remove it.
Sent from my LG-P768 prototype
Phone #1: LG P920 (Optimus 3D), changing ROMs
Phone #2: Milestone B (A953 in A853 shell), stock Moto crap (broken volume buttons, no flashing
Tab #1: Nexus 7, 2012, WiFi+16GB
Tab #2: Asus EeePad Transformer TF101, stock ICS (broken USB cable, need new one :P )
Test phones: Several
Others: Over 50 WinMo/android/Symbian/other devices in this short life of mine