I'm afraid I know this problem.
My iMac developed a similar fault after about 18 months. The short answer is a 
new screen. Initially Apple were reticent, saying without Applecare I was not 
covered. YMMV.
After several phone calls to support and a visit to solutions inc. I wrote to 
Trading Standards who kindly provided me with the information I needed to 
proceed. As a result Apple provided the screen and Solutions did the work, 
which I paid for @ £175 + vat.
 As I say, you have nothing to lose, try Apple and if you have Applecare it 
will be no problem.

Good Luck
Steve

ps at the time there was an extremely long thread on the Apple Discussions wrt 
this and there may have been some progress made in getting them to realise this 
as a common manufacturing defect.

On 5 Feb 2010, at 07:48, Martin Douglas wrote:

> Moved my iMac yesterday, packed it carefully in its packaging and set it up 
> in a friend's house. Everything worked as it should but when the computer had 
> been on a number of hours, a thin blue vertical line became apparent about an 
> inch from the left hand side of the screen. This morning the line was there 
> from switch-on. Anybody got any ideas as to the cause and more importantly a 
> possible solution. The iMac is about two and a half years old.
> 
> Martin
> 
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