This is a known promblem with the treo phones. If you had a wired headset plugged in to your phone then removed it. The phone thinks the headset is still plugged in. Try putting headset back in phone and removing it. You may need to do this a couple of times. If it still doesn't solve the problem make sure your bluetooth on the phone is turned off. If problem still exists you may have to contact your carrier for replacement.
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Make sure that your phone's in call volume is not low or muted. In case it is fine, then the problem is with the microphone and it needs to be replaced. I'd suggest to get it replaced by some authorized person or good mechanic as it will require the dismantling of your phone and if you would do it without the experience, then you might break the cover.
I hate to say it but you might need to hard-reset the phone. If you choose to do so BACK UP YOUR DATA first. You can get a free program called "PIM Backup." This will let you back up all of your contacts, emails, etc. (all personal information). To hard reset, hold down both of the soft keys at the same time, then simultaneously use your stylus to hit the reset button. You should get a black screen with some text on it asking if you want to hard reset. Press the "send" key to confirm. If you don't get the screen right away keep trying as it doesn't work perfectly every time.
First check and adjust call volume. It should set be optimal and secondly during a call adjust the microphone volume.
If this is ok and the problem exsist then the microphone, speaker or some other hardware need to be replaced. Contact local hardware expert.
The first 2 answers sound relay dumb but always start at the beginning when diagnosing a problem.
1: make sure you're not placing your thumb over the Mic (located at the bottom, front of the device).
2: make sure Mute is not turned on, if it is tap it to turn it off.
3: if your using handsfree mode try picking the phone up and using it normally.
There's no Mic volume control in the standard Matchbox based GUI but some 3rd party software does include volume adjustments so take a look at your settings in any control apps you have installed.
lastly see if you get the same problem using a headset, you have not said if you are using the phone normally, with a headset/BlueTooth headset or in handsfree mode.
Post back if non of this helps.