Boy Genius Report cites an AT&T insider who provided the following images along with a story of a user whose iPhone 4 caught fire. The incident appears to be either a problem with the USB port the device was plugged into, or the iPhone 4's dock connector port (an Apple Store confirmed that it was a result of "a defective USB port and not some sort of user error"). Judging from how melted the iPhone-end of the cable is, it looks as though the port on the phone was the problem.
The AT&T source told BGR that the phone's bezel became hot enough to burn the user's hand when he picked it up.
The report brings back memories of exploding iPhone and iPod incidents from last summer. One teenager in France was injured after his girlfriend's iPhone shattered and a piece of the device hit him in the face. The boy was using his girlfriend's phone when it began making a hissing noise and the screen suddenly broke, sending pieces flying in the air.
A second incident involved a 26-year-old security guard at a supermarket in Villevieille, near Nîmes, France. Yassine Bouhadi claimed his iPhone made a noise like a mirror shattering while he was texting his girlfriend. Bouhadi said a little piece of the screen hit him in the eye and he had to remove it with a tweezers.
At the time Apple said the exploding iPhones were not due to overheating but external force applied to the devices.