Got new iphone 4 want to use 1st gen as Touch - sim card ?

I have just replaced my original 1st gen iPhone with the new i4. They activated it at the Apple store, and when I came home iTunes had me restore from a back up - so all my apps, etc transferred. My old phone now just works on wi-fi.
Here's my question:
I would like to keep the original phone as an iTouch for my daughter. When I connect to iTunes it still says "my phone" - but so does my new one. How do I get iTunes to understand that they are two different pieces of hardware which I will want different apps on?
I've read several posts/support docs talking about SIM cards. Mine was not removed when I purchased the new phone. When I connect it it's not saying "connect to iTunes".
Ideas?

Just rename your phones (probably not even necessary for iTunes but it will help you). Double-click on the phone in the iTunes source list just like you would rename a playlist.
I've got the same situation and iTunes knows they are different phones no problem.
With the original iPhone, you need to keep the original SIM in it for it to operate as a touch--Apple's instructions are here.
http://support.apple.com/kb/HT3406

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