whats an unactivated iphone

An unactivated iphone could also be a phone where your two year contract runs out, and you do not renew it.

That device would then be unactivated, and not be tied to any carrier data.

This is semi polular for people who have had older iphones not renew their contract, and just use the device as tho it were an ipod/ipod touch.

Unactivated means it is not set up. It needs a SIM card in the phone, and you need to set up using iTunes, or if you have iOS 5, then you can do it from your device.

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It's an iPod touch...but better...sort of. Maybe.