My friend bought an Iphone 4g from his friend but realised he cannot afford to switch and use it on AT&T, so he offered to sell it to me. I was woundering if I can restore it and pull the sim card and use it as a Itouch? He was offering it cheaper then I can buy a new Itouch, seeing as how I dont have an Itouch anymore. It's already activated, so what risks are there if his friend reports the serial to apple, and phone number to AT&T as stolen? If this is possible, what should I look for besides looking over if it works right (and connects to wifi and syncs to itunes) and does not have water damage?