Restore a Factory Unlocked iPhone 4 (AT&T)

Hello everyone!
     First off i want to say that i am living currently in the Palestinian Territories/ Israel and have been using a unlocked windows phone ever since. I have a Locked AT&T iPhone 4 and have went ahead and taken it to a cell phone shop here that claimes that they can Factory Unlock any iPhone you bring them. The shop here didn't seem fishy or anything because their were about 50+ iPhones waiting for the Factory unlock prosess with many customers leaving happily with a unlocked iphone.
     So i went ahead and dropped of my iphone with the owner telling me that I dont pay him anything untill the iPhone has been successfully factory unlocked. Waiting the 3 days that he told me it takes i come back the 4th day and have been welcomed back with my iPhone being factory unlocked. I grabbed a IL ORANGE sim card and popped it in my iPhone , it said "Searching" then showed my carrier with full bars and a EDGE connection. I Took out the IL ORANGE sim and inserted a JAWWAL-PALESTINE sim and have been also succesful with aquiring a signal and a working EDGE conection.
     My question to yall is that my iPhone is running iOS 5.0.1 and i want to update it to 5.1.1, I need to do a restore on the iPhone to remove some exchange accounts as well as all the data on it and wipe it clean. So if i do a restore then update it to iOS 5.1.1 will the iphone ask to be activated on AT&T or can i activate it on any carrier because its factory unlocked?
     Their ISNT any AT&T coverage here in Palestine/Israel so will this be a problem?

Torkit, I appreciate your help very much,
This iPhone has been officially factory unlocked because I have done an update to 5.0.1 to 5.1.1 without loosing the unlock, and I have confirmed this with many others as well as the owner of the store who did a restore in front of me with one of the iPhones he has unlocked, and surely enough, he was greeted with "congratulations your iPhone is unlocked".
So we can both now confirm that it is indeed a factory unlock.
Now what my question is is that lets say I do a restore to the iPhone and set up the iPhone, part of ios 5 is that you can now set up the iPhone from the device itself, so part of the setup is activation, without activating the iPhone you cannot proceed with the rest of the setup. Will I need to use my AT&T sim to activate my iPhone? Or can I use the local sim I have been using it with (PS,Wataniya Mobile) a Palestinian carrier.
Keep in mind that this is an "unofficial" carrier because of the fact that this carrier does not support iMessage as well as FaceTime, but I wouldn't see this as a problem , because none of the carriers here in Palestine or Israel are official except for IL ORANGE (Israeli carrier).
And let's say I do need to use the AT&T sim card, (I have it in hand and everything), and use it to activate the iPhone, can this be done? Reason why I ask is because their is no coverage here for AT&T.

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