Terminated original iphone won't be able to download 2.0 software?

I have an original iphone that has been terminated from it's AT&T account & given to me, I use it as an ipod touch with a camera, but I recently heard I won't be able to install the 2.0 software upgrade for it since it's no longer activated, is this true?

Aha! It worked!! My original iphone which had service terminated is now up and running with version 2.0 & all the apps that I got, wow, super monkey ball really is fun.

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