Upgrade to iPhone 3GS and still use iPhone 3G?

Hey everyone! I've got a 16GB iPhone 3G on Rogers that I got on a 3 year contract last October, and I'm planning on taking advantage of their promotional pricing and upgrading to a 32GB iPhone 3GS for $550. I'm just wondering, after I upgrade and do a restore on my old iPhone to wipe it, can I use the SIM card from the new iPhone to activate the old one, and them remove it and give the old one to my sister to use as an iPod Touch, or will the SIM card that's in the old one still activate it? Or, do they just put the SIM from the old one in the new one when I buy it (Which is what they'd do for any other GSM phone, but this is an iPhone so it MAY be different)? She's willing to pay me $200 for it which will help cover the cost of the new one. I don't mind swapping SIMs to re-activate it after software updates because eventually she's going to get a plan for it which will make it unnecessary... Also, I know jail-breaking it will fix that but I don't want to jail-break it.

Ok, I upgraded my phone yesterday in an Apple Retail Store and this is what happened:
1. They took the SIM card from my old 3G and put it the new one
2. They activated the new iPhone using the old SIM (It picked up my service immediately)
3. They gave me both iPhones (The old one still functioning as an iPod) and the new SIM from the new phone separate
After that I took them both home and after restoring my new phone from a backup (And inadvertently losing some cool videos I'd taken), I used the "Erase All Content and Settings" feature on the old one. Two hours later, it woke up inactivated and requesting a "Valid SIM Card". I simply popped the unused SIM from the new phone in, and plugged it in to my sister's iBook. After registering and accepting the license agreement and all that other stuff, it automatically activated and started to sync. It functions perfectly fine as an iPod Touch with or without the SIM card, but there's no chance of making an emergency call since it's always on No Service (The SIM has never been used). I'm just leaving the SIM card in there so she won't have to hunt for it every time she upgrades it.

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