To rule out any software issues, make a backup of your device using iTunes. Disconnect the device and put it in DFU (Deep Firmware Update) mode. This will force the phone into a recovery state (note this results in a different restore than using the option found with iTunes). Connect the device to iTunes again and it will notify you that the device is in recovery mode. From there, following the prompts and install the latest firmware (4.3.5). Activate the phone once the process is complete, but do not restore the device or set it up as a new iPhone just yet. Try making a call. If the receiver still doesn't work, then it is a hardware failure.
I strongly encourage you to bring it to an Apple Store (not a certified Apple repair store) and talk a Genius on hand. If it is still under warranty, they will happily fix it. If it is out of warranty, they will diagnose the fault and give you a quote for the price of repair.
Sometimes, depending on how long it's been since the warranty has expired, they will either repair it for free regardless, or fix it for free should you purchase Apple Care (which adds an additional year to the warranty).
Apple's customer service is truly amazing. Go and see for yourself.