Old iPhone problem (2G)

I recently upgraded from an iPhone 2G to the newer 4S.
about a day after I got back from the store, during which time I did nothing new to the old phone, my old phone screen blanked out.
everytime I tried to turn it on, it would show the apple logo, then black out again.
After reading thru these forums I tried a reset? thru iTunes.
Everything appeared to go well, but when it finished my phone would only show a screen showing a USB cord pointing toward iTunes and No Service.
It still has my old SIM card in it.
When I connect it to iTunes it shows up but the only option under it is EJECT.
I tried another resets, once again went thru all the loading parts, but afterwards still showing the USB cord page.
Took it to an Apple store, to the Genius Bar and they did the exact same reset, but once again came back to the same screen and the lady said it looked like a software issue and that all they could do was replace the iphone but since it was 'vintage' equipment they had no idea when it would come in and would cost me $140+ which I am not wanting to do since I can buy an iPod touch on ebay for roughly $70. The only reason I would want to get my old iphone working is to put some kid games on it, with kid videos and let my kids use it (and most probably abuse it).
Does anyone have any suggestions on someplace I could take it to get fixed (cheaply and correctly) so I can get it up and running?
Thank you in advance for your responses.

I apologize I forgot to mention that I tried recovery and reset already.
I am thinking that at this point I either have to jailbreak the phone (would try, but for the iphone 2g finding out easy to understand instructions to jailbreak I could not find easily....or I will have to find a repair shop that still works on iphone 2G's that can fix it for a 'reasonable' price.

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<Personal Information Edited by Host>

All Apple support contact information is on the web site - http://www.apple.com/contact/
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Old iPhone problem (2G)

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