The iPhone is too precious. The fragility is not the big problem; any well made case seems to make an iPhone as durable as most any other phone. It's the water resistance. Or rather, the lack of resistance. When it comes to water, the iPhone makes Barack Obama look a tough negotiator.
It doesn't have to be this way. There's not much good to say about the obsolete Blackberry, but it's pretty good at surviving a swim. Maybe Apple will make some iPhone 5 or, more likely, iPhone 6 improvements. For example, they could go to a different connector, or get rid of the water-vulnerable home button.
In the meantime, every iPhone user needs to know the water drill. Go right now and read the Apple Core's overview. I've been through the rice version of this drill several times (family of five + 1 dog = 5 iPhones with 3 SIM cards = water practice). The key steps are:
- Wipe (shirt can work), remove case, wipe/shake water off.
- Power down the phone. Don't check to see if there are problems.
- Dry thoroughly. (I avoid compressed air, might push water into case).
- Place in a sealed container or baggie of rice (brown is best) or, if you have some stockpiled, surround with DampRid pouches (Amazon sells 'em).
- Leave in a hot dry environment for 24 hours. Some experiment with car in sunlight -- I worry a bit about too much heat. I like using radiant heat from an incandescent bulb.
Memorize and be ready. Remember, a new iPhone 4 is through;">$600-$700 $250 or so. You don't get the subsidized price unless your contract is up, and then you get a new contract a non-warranty iPhone repair will cost about $270 or so. 
That's treatment. Prevention is better. Most iPhone cases don't seal off vulnerable areas; I'm considering the Otterbox Commuter because of the port plugs. If you're boating, or even biking/walking in a downpour, you want a waterproof pouch like the Seattle Sports Dry Doc Digi Case. I bought one for my bike bag, but after my the middle kid's phone did yet another night in a rice bed I made it his phone case:
He can use the phone through the case in most locations, including anywhere outdoors. In his bedroom and in the water-free living room he uses the naked phone. He's happy with this arrangement, and I'm buying another waterproof case for my own phone and (another post) my MacBook Air.
 Correction! Martin reminded me in comments. I was thinking replacement, but in this case the phone is not lost. Apple will do refurb swap for about $270. I don't know, however, if this implies a contract extension.