Can I use my current ATT/Cingular account for iPhone..??

Preparing for the iPhone, three weeks before the launch I opened an ATT wireless line thinking hey it'd be easy for me to just put the sim card to iPhone right? Well here's the case.
I ordered the ATT phone online, went through all the process, I was supposed to get a phone in the mail but I never got it so I never bothered to call because I said oh what the heck forget it I'll just activate the iPhone when I get it. So good thing I got my iPhone two weeks later and iTunes gave me the option for prepaid and luckily I took it because just today I received a bill from ATT!! And I kind of stared at it for a little bit because I was like, am I supposed to be receiving paper bills? hmm So I open it and I look at the number and its not my iPhone number so I was a little lost. I called the number on the bill (supposedly my phone number) and it hasn't been activated....so here's where I need help..

I have two options that I know of.
Since the phone that I was supposed to get was never activated I can call in and cancel it since I never got the phone to begin with.

OR

Am I able to cut my prepaid iPhone and just use my current iPhone SIMCARD to activate it with the ATT account that hasn't been activated yet? Since ATT sent me a bill already anyways? Is that possible? If I called in to cut my prepaid account will I be able to ever use this SimCard?
If not can I just get an ATT/Cingular SimCard and activate it with my iPhone??
Someone help me!! I am so lost because for one, I really thought I wasn't even qualified to have ATT contract since thats what it said when I was activating my iPhone on iTunes which I really was confused about because my credit is more than qualified for cellphone service lol..but turns out I already have an ATT account way before I even got the iPhone.

So can someone give me an advise to this messy situation!