Restore Factory Unlocked iPhone 4 AT T

Hello everyone!

     First off i want to say that i am living currently in the Palestinian Territories/ Israel and have been using a unlocked windows phone ever since. I have a Locked AT&T iPhone 4 and have went ahead and taken it to a cell phone shop here that claimes that they can Factory Unlock any iPhone you bring them. The shop here didn't seem fishy or anything because their were about 50+ iPhones waiting for the Factory unlock prosess with many customers leaving happily with a unlocked iphone.

     So i went ahead and dropped of my iphone with the owner telling me that I dont pay him anything untill the iPhone has been successfully factory unlocked. Waiting the 3 days that he told me it takes i come back the 4th day and have been welcomed back with my iPhone being factory unlocked. I grabbed a IL ORANGE sim card and popped it in my iPhone , it said "Searching" then showed my carrier with full bars and a EDGE connection. I Took out the IL ORANGE sim and inserted a JAWWAL-PALESTINE sim and have been also succesful with aquiring a signal and a working EDGE conection.

     My question to yall is that my iPhone is running iOS 5.0.1 and i want to update it to 5.1.1, I need to do a restore on the iPhone to remove some exchange accounts as well as all the data on it and wipe it clean. So if i do a restore then update it to iOS 5.1.1 will the iphone ask to be activated on AT&T or can i activate it on any carrier because its factory unlocked?

     Their ISNT any AT&T coverage here in Palestine/Israel so will this be a problem?