I sent my DS's cell phone thru a wash cycle. I wash sure that it was toast!
We let removed the battery, and allowed it to dry out for 72 hours. Lucky for us, it sprung back to life. However, the battery doesn't hold a very good charge and really should be replaced.
AT&T does sell insurance on the phone that will cover theft and damage, including water damage. I priced it out after this little incident but determined that the added cost per month wasn't worth the cost of the phone.
I'm not sure what I would have done if it had fallen in the toilet!