Wifi connected to network but no icon or wifi actually working iPhone

The screen on my old iphone broke recently and i just got a replacement from the insurance. I went through all the usual stuff, music contacts etc, but once I connected to my home network again it doesnt work. Its telling me its connected but theres no icon at the top of the screen and im definitely not using wifi. when making a call or if i attempt to change my carrier settings, the icon appears. when i went into airplane mode and come back out it works shortly, a few seconds. basically its appearing occasionally but im definitely not getting my wifi. ive spent the last hour browsing forums but nothing seems to work. forgetting the network, resetting network settings, rebooting the phone. Im starting to get ****** off.
Macbook Air Mac OS X (10.6.7) iPhone 3GS 16GB