the same happened to me last wednesday. i called verizon and we went through factory reset after factory reset. and nothing happened.
they said that the file corrupted the phone so bad that a factory reset wouldnt work. totally wiped the phone clean.
Verizon then called motorola and moto told verizon that the phone needed to be replaced asap. but it was a refurb. would get it in two days but a refurb.
fortunately i have a black tie protection plan from best buy. took it in, will have to wait maybe three weeks but i get a NEW Droid off the shelf.
last time i had to get a replacement phone they offered me an Incredible instead of the Droid but i decided to stick with the Droid.
who knows if i will give in again or accept an "early" upgrade if offered.
EDIT: whats neat about this program? the first time i replaced my phone, they gave me the battery, sd card, and battery cover. apparently they dont need those things. then when i got my replacement, they gave me a new droid with a new battery, new sd card, and new battery cover. so i now have backups.
when i turned in my phone wednesday, they did the same.