I have iphone 3gs. I upgraded its software through itunes but it stopped reading sim. Then I restored but since then iphone is locked with message to insert a carrier compatible sim. I've checked my sim is ok. How to restore the iphone?

I have iphone 3gs. I upgraded its software through itunes but it stopped reading sim. Then I restored but since then iphone is locked with message to insert a carrier compatible sim. I've checked my sim, it is ok. How to restore the iphone?

I'm going to make some guesses here. You bought your phone second hand. In other words, not from Apple and not from your carrier. What you got is a hacked phone that was originally carrier locked, most likely to AT&T in the US. You are NOT in the US. (If I get any of this wrong, please tell me).
What has happened is when you updated the software, it was re-locked to the original carrier.  ONLY the carrier can authorize an unlock. If it is locked to AT&T, you're out of luck as they WILL NOT unlock an iPhone for any reason.
If it's locked to another carrier, you will have to find out what carrier that is (you can NOT tell by looking at the model number) and find out if they unlock iPhones. If you can't find out, or if they do not, then your only real option is to sell the phone and purchase one from a LEGITIMATE source.
You can find out who the supported carriers are here: http://support.apple.com/kb/ht1937

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