Old Iphone 3 sync to computer to transfer files to iphone 4- now asking for sim card because it cannot activate old iphone?

Ok, I purchased new phones... and hooked up the iphone 4 to the computer without knowing that my husband hadn't synced his iphone in like a year ( yeah, yeah, I know, you are supposed to keep that updated). Anyway, so his new iphone has basically nothing on it from his iphone 3g. So I restored the iphone 4 to new... and then plugged his 3g into the computer-- it required a software update to 4.2 or whatever it is now. So I do that and then wait for like 20 mins and now it is asking me to put a valid sim card into the phone so that it can activate it???? Well that phone no longer has a valid sim card as the sim card has been transferred to the 4 and now I only get that screen. Is there no way to make this a touch now? I'm so confused... ... so please someone help me... because I think my husband may kill me since he was perfectly happy with his 3. LOL....
Thanks!

The original SIM should still be in the iPhone.
The 3G and iPhone4 use different size SIM cards, so the only way to move the SIM from the 3G to the 4 would be to physically cut it down to the correct size.
If the original SIM is still in the device, then it sounds like the device is carrier locked and was hacked to allow it to be used with a different carrier.
For future reference, there is no requirement to upgrade the iOS on the device in order to sync.

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