How can use an old iphone 3G for calls and wifi only

I upgraded to a iphone 4G and gave my 13 yo son my old 3G which is out of contract. His old phone IS a smart phone but he does not have a data plan. After he swapped the SIMM card, he got a MSG from AT&T stating that he has to a data plan whether he wants to or not. This seems really abusive on their part as the phone is out of contract, and belongs to me. Why should I have to purchase a service I don't want.
Is there anything that can be done so that he can use it as an ipod touch with telephone capabilities, and not have to pay for a data plan?