You can give it away, sell it, or just use it as an iPod touch, according to Christopher Breen at Macworld

The author asks if it’s really necessary to keep that old iPhone -- it may be -- and what one can do with it if you decide to keep it.

There is some helpful advice about precautions to take before passing that old iPhone along, such as wiping the data. iPhone 2.0 offers a much more robust deletion process, but it can take several hours so that’s one good reason to update the iPhone from 1.x to to 2.0 if you haven’t yet.

You should be able to get a decent price (US$200) from the various companies that will buy an old iPhone from you. However, a check of eBay shows that, internationally, the iPhone is worth much more. It all depends on your comfort levels with various selling options.

The author discusses the license agreement with Apple when it comes to unlocking that old iPhone. Even legal experts are at a loss to clearly explain the legalities of unlocking the iPhone, but for those who wish to do so, the author provides a reference to the PwnageTool -- which doe the job simply and easily.

If you decide not to unlock the iPhone, it will serve very nicely as an iPod touch equivalent. When you upgrade to an iPhone 3G, the calling function goes dead on the old iPhone, but it still has a lot of utility.

"It’s hard to imagine a more functional non-functional gadget—one that maintains its original value and, even when deprived of its phoney prowess, provides a wealth of practicality and power," Mr. Breen concluded.