Using old iPhone as an iPod

Question

I replaced my original iPhone with the second generation Model 3G. I want to use the old one as an iPod. I have a problem with iTunes. It recognizes the old iPhone as my 3G model. How can I sync both on the same computer without getting both screwed up? (I want to give the old one to a family member to use it as an iPod). Would I have no problem on a different computer (with iTunes).
The AT&T store removed the sim card; the old iPod apps seem to work OK, even those apps that use my WiFi.

Answer 1

Follow the directions here to use your old phone as a touch:
http://support.apple.com/kb/HT3406
You can sync as many devices as you want to the same itunes account, there is no limit. You can select what content you want on each device & itunes will keep everything straight, by device on subsequent syncs.
The AT&T store removed the sim card;
THAT SHOULD NOT HAVE BEEN DONE! you will need that sim to update software or restore that phone. Go back to the store, if your old sim is in your new phone, have them deactivate it and put it back in your old phone. Get a new activated sim for your new phone. They should not charge you for this. If they give you any problems, ask to talk to the manager & refer them to the support article I referenced you.