I get this message all the time. It seems to happen most often during 'high volume' call times, or if I'm in an area where there are a lot of people overloading the local cell. Since the area where my home and office are has extremely limited signal strength, it happens a lot there as well.
Verizon told me that I needed to purchase a "new" phone from them to correct the issue. The problem with that is this problem happens with several other people in our area, including people with the newest phones on the market.
i've never seen this on my phone before, but it's a network issue...all phones are capable of this issue, but with network improvements to handle high traffic it should not be an issue.
We just had a guy in our VZW store looking for a resolution to this exact problem with a pearl flip. We put a dummy esn on the account and swapped it back to the pearl flip. Activated fine... Worth a shot if and when it comes up later. :-)
Same problem here. No incoming or outgoing calls and data transferred fine. After multiple battery pulls without success, I pulled the battery and left it out over night. I can't say for certain if that's what fixed the problem but it's working!