Why did my phone work only for 1 day (after water damage)?

My new iPhone 4 has been dropped into the toilet and immediately taken out. It shut itself off and I tried pressing buttons to turn it back on (I know that was a wrong move). I had the phone shaken out and submerged in rice for 48 hours. Occasionally I dried it with a blow drier on cold low setting for a few minutes at a time.

48 Hours after the incident I tried turning it on and nothing happened. I plugged it into the wall charger and left it there. About 5 minutes later the phone turned itself on. I checked all major functions such as calling, camera, ipod and everything worked fine. It continued working for 8 hours after which it just shut off and stayed that way ever since. I did more drying, ricing, and charging, but nothing helped.

What part of the phone is damaged (most likely)?

Thanks!