This may sound insane (or a joke to some) but its real that an iPhone 4 literally burst into flames while sitting on a wooden table. This happened as a result of battery getting over heated with smoke coming out of the iPhone eventually causing it to blow. The owner of the iPhone named Omar has also posted a video about his experience and is now contacting Apple to try and get a replacement iPhone 4.
The phone got hot then started smoking then blew up. My wife and kid were in the room and it set off my fire alarm. It slighty burned my hand when I tried to pick it up. Basically the battery caught on fire.
Check out the screenshots:
You can also watch the video of it here.