By Slash Lane

Published: 08:00 AM EST

AppleInsider reader poll: What do you plan to do with your old iPhone? Give it to a family member Give it to a friend Sell it to offset iPhone 3G cost Keep it as a WiFi iPod Smash it and post a video of the smashing online

Original iPhone owners who prefer not to give away or sell their old iPhones after upgrading to an iPhone 3G can instead keep their devices and use them as WiFi-enabled iPods, AT&T has confirmed.

The exclusive US provider for the Apple handset issued a series of documents and videos this week instructing existing iPhone owners on the steps necessary to hand down their old phones to family members or friends after purchasing a new 3G model.

Although that's the route AT&T prefers, as it generates high margin service revenues for each additional iPhone on its network, it's not the only option owners have.

A spokesperson for the carrier confirmed to AppleInsider that neither AT&T nor Apple will prevent de-activated first-generation iPhones for serving as surrogate iPod touches.

"If the [original] device is not re-activated as a wireless phone after you’ve upgraded to iPhone 3G, it will still work as an iTunes player and can access Wi-Fi," the spokesperson said.

That means old iPhones can still surf the web, check email, and browse the mobile iTunes store when connected to WiFi. Additionally, they'll be able to function as a handheld gaming device and widescreen video iPod with calendar and photo functions.

It's recommended that owners who take this approach upgrade their original iPhones with iPhone Software v2.0 (which includes the App Store) on July 11th prior to de-activating the devices, as it's unclear whether upgrades to non-active handsets will be possible.