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So, the new battery seems to be working okay, however now my iPhone 3G spontaneously freezes and requires hard reset to restart, it sometimes restores sometimes doesn’t, but eventually it freezes again and has to have a hard reset again. Anyone have any idea whats wrong here?

have you tried the old battery to see if it keeps the same behaviour? If it does not, contact your vendor and get a new battery. The iphone in general does do weird stuff with a flaky battery.