I have the same problem. I cannot hear the other side unless I use headphone or speaker. After google for solution, I replaced the front speaker earpiece, it works now. It cost me $10.00 shipped from Treoparts (check ebay). It is very easy to replace if you have tools (about $7-$10 from dealextreme.com you can use these tools for most of mobile phone)
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I had this problem. It appears that the solder joints on the headset jack are rather weak. When they break, the phone thinks there is a headset inserted into the jack, even when there is not. This disables the phone's built in speaker and mic. The solution in my case was to either replace the phone or have it fixed under warranty/insurance.
I had to have my Treo swapped once already because of a problem with the headset jack. The same problem is happening now - the phone always thinks the headset is plugged in (even when it isn't). That results in phone ringing (unless on virbate / silent mode) but no audio through the speaker in the back, and no speakphone icon appearing.
Given the symptoms you describe I would go to your service provider and (hopefully) get support under warranty - very likely hardware related.
THE phone's Headset Plug is stucked. Try to plug and Un-plug the headset many times for it will release. Best, Play a Music and try this on so when you haer the sound coming from the phone, it means it works