A coworker bought a 2g iPhone last year.  He just bought an iPhone 3g,
and I bought his.  I figured that, since he'd already unlocked it and
used it for a year, that I'd be able to use it like an iPod touch, but
with Speakers, Bluetooth, a Microphone, Camera, etc.  It's been
working great for the past week (I bought it last monday).  However,
tonight I sync'd it with iTunes, and (first time that I know of) it
backed it up, and now I can't run any of the apps from the App Store.
When I click them, they start up, then quit.  I also got a "Waiting
for Activation" "This may take some time" message, with a Dismiss
button.  I got this last week too, but clicking "Dismiss" seemed to
fix it then.

I've rebooted it several times, resync'd it, the only thing I haven't
done is restore it.

This is a stock iPhone, running the 2.0 upgrade (applied before he
bought his new phone).  I haven't jailbreaked it or anything, just
want it as an iPod touch with some extra features.

Anybody have any ideas?  I was under the impression that I could do
this, that I didn't have to buy AT&T service if I didn't want the cell
functionality.  The App Store has been working great, I've got a bunch
of cool apps.  Am I screwed?  Thanks.

M