What to do when iphone locked up and asking for a valid SIM card?

I have a second hand iphone 2g 8gb at&t. it was working well i was using it for just WIFI and GPS. I have no contract, no SIM card and currently not using GSM network. I tried to update my itunes so i can syncronize the iphone to my PC and wanted to unlocked and jailbreak it. The last owner told me that it was upgraded to 3.0. When i tried to syncronized my iphone with itunes it locked up and ask for a “Valid SIM card with no PIN lock to activate iphone”. I dont know what to do and i need the phone badly coz i will be travelling to asia by the end of this month. Can i use a prepaid SIM to make it work? Can i jailbreak/unlocked it without SIM? Please whoever knows to how to fix this and get working again, Please let me know what to do. Thanks a bunch to you.