I wil be upgrading to the iPhone 3G next friday, so I will have no need for my old 4GB iPhone. ATT just announced that older iPhones may be kept deactivated and used just like WiFi iPod Touches.
Next Friday I will upgrade the software to 2.0 to enable the user with will abilities of the App Store and other upgrades that come with the software.
So as you receive it, it will in essence be a fully functional iPod Touch (with a camera, which the current iPod Touches do not have) with the ability to pop in an ATT SIM card and start using it as an phone as well. I'm not going to explicitly say it here, but if you're a T-Mobile user, we can talk about unlocking the phone to work on T-Mobile's network.
If your purchase it and do not put a SIM card in, the only thing you won't be able to do is talk on the phone and use maps if you don't have WiFi or EDGE signal.
This was just given to me a week ago as a replacement for my old one that broke, so it is practically brand new.
$150 Shipped (to the lower 48) gets you the iPhone, headphones, USB/Dock cable.
Here is the article I am referencing:
http://www.appleinsider.com/articles...ifi_ipods.html
I should mention that if you choose to use it just as the iPod touch, like any other iPod there is no service fee from any company.