sensor that recognizes when it's upside down

The mercury switch used to be the simple solution for this.  If you
can't buy one new, maybe you could salvage one by upgrading an old home
thermostat?  I once had a simon-like toy that used a ball bearing to
detect which of 6 areas was up.  Never opened it to see whether it
pressed normal pushbuttons or just shorted exposed contacts...

Here's another variant:
http://www.instructables.com/id/E14GB1P4ZNEXCFFZCM/

You could use a tilt sensor.  But be careful, some of them
use a small metal ball that may rattle if someone shakes the
phone.

Or you could use an acceloremeter.  They can detect if
gravity is pulling in the "wrong" direction.

Before you spend too much time trying to figure out how
to flip the screen, you should think about why you are
flipping it.  It seems like bad UI design to me.  If someone
is using their phone while lying in bed or whatever, they
may find it quite annoying if the screen suddenly flips
upside down.

     If you're a hobbyist, see this:

http://www.itcelectronics.com/product_info.php?products_id814&osCsid bd1ac4fd2758a18be5851b1925400c

Philmore Non Mercury Tilt Switch SPST Open-Closed Dependent upon tilt ang
Part No.: 30-17072
     $1.52
Non Mercury Tilt Switch SPST Open-Closed Dependent upon tilt ang
Click to enlarge

Non Mercury Tilt Switch SPST Open-Closed Dependent upon tilt angle 5A @ 24V AC.

     If you're designing a cell phone, you want a surface-mount part, which
you should be able to find yourself.

                    John Nagle

You probably want a 3 axes accelerometer.

http://www.google.com/search?sourceid=navclient&ie=UTF-8&rls=GGLJ,GGLJ:2006-37,GGLJ:en&q=accelerometer+3+axes

http://www.sparkfun.com/commerce/product_info.php?products_id%2

They aren't cheap in low quantities, but they are really small. As
long as the cell phone is in nonaccelerated motiong (moving steadily
without speeding up or slowing down (i.e. resting on a table or in
your hand) this will let you sense :"down" because gravitational
acceleration can not be distinguished from a constant acceleration.
Good ole Einstein figured that  one out for us.

--
Randy M Dumse.
www.newmicros.com
Caution: Objects in mirror are more confused than they appear.

Yes, you can use an accelerometer, but it might be a lower cost option
to use a light sensor, e.g. a photodiode.
I used this sucessfully on a recent camera that I designed. The
prototype camera would power off when placed on a table and so extend
battery life.
Lyndsay Williams
www.lyndsayw.com