This user reports problems he has with exchanging a broken iPhone:

We bought an Iphone at the AT&T store on East Kellogg in Wichita, Ks. on Thursday, May 7th. The phone didn’t seem to work right in phone mode and quit working 5 days later.We returned to the store today and wanted to exhange the phone. No deal. We’d have to send it to Apple. AT&T sold us a defective phone. Both Apple and AT&T said it was our problem to solve and neither stepped up and said, “We’ll take the problem and make it right.” So, we were so disappointed in their lack of customer service, we decided go just return the phone and get our money back. We were charged a restocking fee of $29.95 for a defective phone. I hope you don’t get it. The funny thing is Apple offered us a brand new phone for $29.95. The AT&T’s policies stopped them from simply giving us a new phone. But, once we returned it we could have bought another phone from AT&T and only been out $29.95 - the same amount Apple wanted. Long story short, we moving on to another phone and phone company. Stay away from iphone. Our advice.