Use old iPhone 3G as iPod Touch
I just replaced my iPhone 3G with the new 4S and would now like to continue to use my old phone as an iPod Touch. I've read many posts about this, as well as articles both within and outside of Apple support, but the advice is conflicting among these sources and I've reached a dead end.
I first erased and restored the old iPhone to factory settings and then turned the phone completely off. Next, I removed the SIM card. Then I turned the phone back on and placed it in my dock to connect to iTunes on my computer. But I get a message stating that a SIM card must be inserted in order to proceed further.
However, I don't want to set it up as a phone; only as an iPod Touch. Shouldn't I be able to continue with this process without a SIM card? Won't putting the SIM card back in make iTunes think it is a phone?
Thanks in advance for assistance. There is a lot of conflicting information out there on how to do this and it would be good to have a simple, straightforward explanation.