This video from AT&T describes the process for giving your original iPhone to someone else when you buy iPhone 3G.
Don't let that old iPhone go to waste. Give it to somebody who needs it.
You'll learn that you'll need to get a new SIM card to the old cell phone, then activate it like you normally would. It's fairly simple. Just watch the video to see how to transfer your phone to somebody else, and see how to go to AT&T to activate it.