Alright so my buddy has a D2G and 3 days ago the digitizer just stopped working. The phone is 3 months old. No water damage. Just up and quit working. Everything else seems to be working fine though. Like if you hit the power button the screen turns on and off and you can scroll through the power options with the keyboard. Still recieves calls and texts and everything as far as the OS goes is intact. The digitizer just doesn't work. It isn't rooted. What could this be?

Plain and simple? A faulty digitizer.
My father-in-law gave me a Droid1 that stopped working for him about 2 months after getting it.

Since it is only 3 months old, I would recommend getting it replaced. If that isn't an option, you could probably replace it if you are handy with some tools.

Yeah he had an upgrade so he went and bought a droid 3 this morning but now I want the global lol. Think it could possibly be a loose connection?

I doubt it would just be a loose connection. It's a connection sort of like the sound card cable in a computer.
The top is removed with a T5 torx driver with the 5 screws you can see when the slider is open. Once the top is removed, the insides should slide down a bit more and there are 5 more inside. After that, it's a simple unplugging of the cable, and swapping out the digitizer which runs about $25-$30 online.
There are a few videos online if you want to see it first, but it looks very easy. I'm going to do it to that phone I mentioned myself.