IOS – Reset iPhone without iTunes or iCloud

I don't have a great answer - but this is fairly serious so I'm going to start an answer and hope someone else edits or answers if they can spot something I haven't.

On the computer, the only "red flag" would be if you wiped the phone of all content and settings, named it exactly the same name as it was before (which could be iPhone) and then backed up again and overwrote the backup with the actual data. iTunes tries hard to prevent this and spawn off a date-protected backup when it detects this, but I've seen this check fail and people lose backups from time to time. The remedy here is to restore the PC from a backup that has whatever MobileSync folder is the most recent.

On iCloud - you also shouldn't be able to overwrite a "full" backup with an empty one. Also, iCloud explicitly keeps several versions of the backups going back in roughly day intervals. It also normally stores backups for different devices without collisions or overwriting another backup.

The good news on iCloud is you can always get help from Apple at http://www.apple.com/support/icloud/ and from retail stores. New devices or ones covered by Apple Care also have phone or web support in most countries. All new Apple products have a 90 day window of set up help. Hopefully one of these can step in and assist. Not only does Apple get a data point where their tools let you down (and exactly what circumstances this happened) - they also see many people in this situation and will hopefully waste a minimum of your time getting this sorted.

This is most likely the carrier intentionally deactivating the old SIM.

When iPhones first came out, your current phone would normally get deactivated at the moment you purchased a new phone and told the carriers to move the service to the new phone. Now, they wait until the new phone checks in to perform the swap to account for delivery delays, backups, etc...

Your first step should be to contact the carrier and explain that you want service on both phones and arrange for which number rings to which device. They might be able to accommodate this over the phone, but if the old SIM has been deactivated in the networks, most carriers are very unwilling (or unable) to re-activate the old SIM and instead ask you to get a new SIM from them at a convenient local retail spot or by them shipping you new SIM card(s).

Apple's restore process and activation of the device doesn't affect network activation and for locked phones, you just need a SIM for the correct carrier to activate the device. iOS does not check or care that the contract is expired, not established or live for iOS activation - just that the SIM is manufactured for the correct carrier.