Aircon - it's the future!
My 3G was icy cold yesterday after navigating in maps and streaming music over bluetooth for hours on end in the hot sun.... but that might just be because it's mounted on the vent and the aircon was on full blast. ;)
There is obviously a fault in the phones that heat up to the point of burning though, if nothing else I would have thought the phone would switch itself off if it had detected it's heat was above a certain level, the laptops do it, so the phones should - plus a phone doesn't heat up THAT much just using the ipod function, there's a dedicated chip for audio decoding isn't there? Even if there isn't, it takes next to nothing these days to decode music... so either he was running another application that was hammering the processor none stop, or the phone is faulty... I'd go with faulty though since some others are reporting the same thing.
This is really a symptom of a bigger problem at Apple though - Apple stays silent while users are forced to complain amongst themselves and to papers until they come out with a fix or even acknowledge the issue - which is wrong - if they only replied with a "we have reports of some users having issues with overheating phones, we are in the process of investigating and will get back to you as soon as possible" message people would be a little more forgiving, even if it's a manufacturing fault (which happens to everybody!)..... instead the silence just breeds conspiracy and guesswork which is one of Apple's most annoying features.
Makes me wonder though - I wonder if I could release an iBurn app that just heats the phone up to the point of damaging itself or the user... could sell well if you advertise it as a ticket in on settlement apple will give people if people start taking apple to court! - sell it for 99p, cheaper than doing the lottery, with better odds! :)