My wife inherited my old iPhone 3G, which has worked fine for almost two years. Recently, the phone developed a bad habit of crashing and hanging on a blinking red low battery screen. My wife states that in some cases the battery reports that it has full juice even when it is near empty.
I suspect the battery is bad and have ordered a new one from dealextreme, which should arrive in a few weeks.
In the meantime, I discovered a simple way to get out of the hung screen.
When the phone is stuck on the screen with the low battery indicator, it will shut itself off after three blinks. Start this process with the phone in the off mode (very easy)
- Allow the phone to shut off.
- Plug the phone into a usb powered port on the computer (I don’t believe iTunes needs to be runing(?), but this does NOT work in an AC outlet!)
- Press and hold both the home and power button until the power cycles. In just a few moments you should see the boot logo!
This method is simple, but may require some tweaking.. please let me know what worked for you.

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