how do you text message from an iPhone that no longer has phone service?

You can not send SMS or MMS without cellular service. Since iMessage uses (I believe) SMS to activate itself for the phone number you're using, I'm don't believe it's possible to activate it without cellular service. If I'm incorrect, hopefully someone will chime in and correct me. I may very well be wrong about that, but I don't have a phone without service to test this on.

You can't send SMS from a phone that has not service.

If they are using it as an iPod with wi-fi there are some texting apps that can send a text to a cell number. Of if the not in service iphone has iOS5 they can use iMessage.

Google Voice over wifi works on my 3GS with no cell service.