I got an iPhone 3G off my sister who had got it off a friend, I have the latest update and everything seems to work fine, except when i put my telstra sim card in, a message pops up saying "sim failure", can this be fixed or this iPhone unusable? thanx :)

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It might mean that the phone is locked to the previous carrier - if you put your sim card in and this happens, could be that the phone is locked.
You would need to ask your sister to ask her friend if the phone was locked to the carrier she was using.  If so and you want to use another sim card in the phone the original phone company will have to unlock the phone before this can be done. 
To get the phone unlocked though your sister's friend would have to contact the phone company to get it unlocked and she would be the last person to use the phone.

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