Do I have to update my iPhone when I restore it?

I requested my iPhone 5 to be unlocked by AT&T. They gave me instructions on how to do it by simply restoring the phone, and when it is restored, the phone will be unlocked. I'm on iOS 7.1.2 right now and do not want to update to 8. Will it have to be updated in order to be restored?

The general rule is that when Apple stops signing certain firmware that you wish to restore to, then you will see iTunes giving you the option of Restore & Update. It means you want to restore iOS 6 and apple is only signing iOS 7 then you will get only iOS 7.

However currently apple is still signing iOS 7.1.2, so you better hurry and do the restore. You will need to make sure that you manually download the.ipsw file for your iPhone

Nope, you only update when you actually want to update.