So, can we assume from this last post that you have hacked the phone? If that is the case, then you have done something that voids your warranty. Apple may/may not replace it. Their policy is not to replace if you have modified the phone in anyway. The process of modification could have caused the problem, in their view.
If you have not modified the phone, and just cancelled the contract, and are only using the non-phone/data options of the device, the issue would be the reactivation of the new device. The other options will only work if the phone is activated.