When you're turning up the volume and it says "headphones" under the volume bar, it's because it thinks you have headphones plugged in. This will disengage the speaker, which is why you can't get any sound without headphones.
Follow Yeah_Baby's advice and try to get it cleaned, and hope that the headphone jack isn't damaged. Something is shorted out in there. That can happen from crud in the jack, or if something is damaged.
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