Ebay dispute? Iphone 4 unlocked 16gb? Buyer claims it is not unlocked?

I sold an iphone 4 16gb GSM to a buyer on ebay. Now this buyer claims that this iphone does not work with at&t or any other of his SIM cards the phone is unlocked. I unlocked this iphone 4 with ultrasn0w on iOS 5.0 ; now he also claims that this iphone 4 doesn't work with at&t or any other carrier but there's no way that the iphone 4 doesn't work with at&t since it is a GSM phone? Now the buyer is offering to send it back to me and i fix it for him? Is that a good idea for me to let him send it to me and i find a solution or prove that he is wrong? What is the optimal choice for me?

Added (1). Http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=120959709451#ht_500wt_1203

This guy is a dumbass, he needs to return that brain of his back, fix it and stamp it, just tell him that any shipping charges have to be handled by the buyer, make sure you include this in your next item, as far as returns go of course. This way you will not get screwed with receiving and sending the item

Sorry, the iPhone 4 can only be unlocked on the original baseband 1.59.00. Unless the baseband was preserved when updating to ios 5, the phone can't be unlocked through ultrasn0w.

Have it Permanent unlocked in Apple's IMEI database. It will stay unlocked.
http://attiphoneunlocker.com/

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