IPhone – Show iPhone as non-iPhone on network

I just did this myself - I upgraded to an iPhone 4 and gave my sister my iPhone 3G. I put her AT&T SIM inside and she was instantly able to send & receive calls and texts. Since she doesn't want to pay for data (yet), she used the new iOS 4 network setting to turn off cellular data. I have heard that AT&T scans their network and automatically adds data plans to 'smartphones', but so far this hasn't been the case.

If she does want to use data, have her call up AT&T and let them know about the phone switch on the plan and they can sign her up for the iPhone data plan - it's $15/month for 200MB and $25/month for 2GB. You may be able to do this yourself online - I haven't tried - but contacting AT&T is quick and relatively painless and is guaranteed to work.

One other thing - if her SIM is ancient (pre-3G), then you may need to get a new one that supports 3G from an AT&T retailer or call AT&T and they can ship you a new one. They may charge a nominal fee (~$10) for this service.

No - the sim card only provides an ICCID number to the phone. That number is read once per boot as the phone just uses the sim to identify what account to bill for service when registering with the nearby cell towers (IMEI and ICCID together let the system know what number to assign your phone and who to bill).

Something else must be causing your observed behavior.

Keep in mind, there is no guarantee two phones in the same location are not on distinct cell towers. Especially if one tower is overloaded or doesn't have high speed data so the phone /carrier might pick a faster connection that happens to have less bars of signal.

What does your carrier say if you call them for a site survey / diagnostic?