Using my older iPhone 2.5G as iPod, Wifi and buying applications

If I give my old iPhone to my son to use as music player, WiFi access and be able to download games and other application from the Apps. Store.
But now this iPhone would be a disconnected phone.
If there is a new software update in the near future, say 2.01, then how am I able to update the software which is a disconnected phone connecting to iTunes.
My son has his own iTunes account also.
In summary, an iPhone, to use exactly like an iTouch and also be able to update the new upgrade software when and if Apple updates one, in future?
No phone line is active, my old iphone number is to be transferred to my new 3G iPhone.

Using an original iPhone without a wireless service plan: http://support.apple.com/kb/HT3406

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