Iphone 4 screen colour problem? LOTS OF POINTS?

Whenever you use a program it like stays there but very faded… And the home screen still appears there, the apps aren't like black or faded. They just have all this rainbow colour in the backround… Also about every so often if fixes and changes but to normal, its somewhat temporary, however, it normally goes away but this time its been there for more than 2 days.
Is this an lcd problem or something else? And when an apple update came out its was decent…
Should i restore my iphone?

Cheers guys

Wow. If your warranty is not expired, you could get a free one. Haha apple is not the greatest so just a warning. Don't restore unless all of this doesn't work. Reboot, sync it or throw it. If it happens when you press too hard, then its you.

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