A firmware reinstall via Nokia Suite fixed the phone restart problem at plugging of headphones. Don't forget to keep atleast 5 mb of free phone memory at all times to keep it running smoothly.
Camera could be because of too much dust in front of Camera Lens. Sadly, as the phone's camera lens is covered by the main body, you need to get the phone disassembled to clean. I'd however recommend you not to get a so old phone opened up as it sometimes starts encountering problems with slider flex or the internal circuits.
About the just audio part, the most common cause is you're playing an unsuppored video. Are you trying to play a high quality MP4 video? It won't be able to play that.
-------
Die hard Nokian, willing to help other Nokia Users.
Current Handsets - Lumia 900, Nokia 311, Nokia C3-00, Nokia C1-01, Nokia 6500-s.