You don’t need to delete old data, although you can if you want to if you need the space. It will work fine as what is essentially an iPod Touch. You can sync it to iTunes to access your music library, use it with streaming services.
The only “quirk” is if you ever reset the phone to factory settings you will need to have a SIM card in it to reactivate the phone. It can be an “expired” SIM that you just left in the phone when you retired it, or you can temporarily move a SIM from a working phone. The SIM only needs to be in the phone for the few minutes until activation completes.