I was getting the same error on my 3Gs and I didn't even know that this prohibits the speaker from working. I tried to play a song and sure enough, the volume control wouldn't even show up and there was no sound.
Looking at the posts, I took a dry toothbrush and gently began cleaning the dock connector. Within seconds, the volume control showed up. I played the audio and it worked.
Thanks all for your tips. The error is most certainly due to problems with the dock connector.
Rushabh