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No, not necessarily, but it can cause a minor issue. iPhones use a Lithium-Ion battery for its power, using while it's charging won't necessarily ruin the battery, but if you're using the phone while the battery is in the charging process, it can cause the phone to think it has more power than it actually has.
Q: Use while charging hurt batteries? Will using my iPhone 3g while charging damage the battery or shorten the battery life in any way or even make the battery gauge inaccurate? Also, if I use it while charging does it use power from the battery or does it use power straight from the charging source (ie. electric socket or USB port). Thanks. HP Laptop, Windows Vista.