Oh No!It sounds like you may have turned on assistive touch on your iPhone 4. Here is a desciption of what it is and how to turn it on and off.
AssistiveTouch helps you use iPhone if you have difficulty touching the screen or pressing the buttons. You can use a compatible adaptive accessory (such as a joystick) together with AssistiveTouch to control iPhone. You can also use AssistiveTouch without an accessory to perform gestures that are difficult for you.
Turn on AssistiveTouch: Go to Settings > General > Accessibility > AssistiveTouch. You can also set Triple-click Home to turn AssistiveTouch on or off; go to Settings > General > Accessibility > Triple-click Home. Let me know if this helps.