OMG DOUBLE TROUBLE 3.0 iphone itune icon after update HELP

OMG!! I followed the restore instructions ie updated my computer to most recent i tunes blah blah blah and my fricken i phone is still giving me the itunes plug icon!!! I dont understand what the **** happened to it. I updated the iphone and i tunes fd it up!! itunes tells me after the restore that the sims card is not being recognized by the iphone. I got a new sims card and called att to get them to id the sims with the i phone but the stupid *** phone still doesnt recognize it?
Question....I got this phone without knowing the history? If this phone was unlocked in the past and I try to update the phone could this be the reason im having such difficulties? HELP ME!! Thanks please spare me from chucking this iphone into oncoming traffic!!
dell hp pavillion Windows Vista