I have been struggling with the same issue. Purchased Fascinate at VZW store. Love everything about it except I have this annoying mic feedback or sidetone when I hold the phone close to my mouth. I too found that holding the mic further away nearly eliminates the problem. I decided to exchange my phone and they gave me a new one. The new one is not as bad, but still very noticable when mic near my mouth and volume turned up. I also think it has to do with the depth na dpitch of your voice. i found my sister's voice doesn't seem to cause the feedback as much as my voice.
It is funny because I spoke with Tier 2 tech support and they said there are no known issues like that related to this phone, that is a pile of BS because I am reading about it all over the net.
I have decided to keep the phone since I use bluetooth or speaker when driving, texting and when I do talk on the handset i just hold it away from my mouth and no one can notice a difference. Only time it will be is problem is when volume is at full, my finger is in my other ear and the environment is super noisy (that is what texting is for

right). Too bad because it could have been a really great phone if they got that hardware right, especially once the Dev community gets a few more months with the phone. This will hold me over until a solid 4g comes out.