IPhone 4 without SIM card iTunes?

I'm buying an iPhone 4 from my friend because he got a new phone. I don't believe it has a SIM card in it. I've read on the Apple discussions that I can just use the iPhone like an iPod Touch without a SIM card, but I also read that I have to have a SIM card to update it through iTunes or something? Is this just to activate it for the first time? If I format the iPhone, will I have to have a SIM card in it to activate it again, but still without a service plan? And I do realize that some of you will just tell me to buy an iPod Touch if I want an iPod Touch, but this iPhone is only $100 and I don't have to wait for shipping or anything, and I like the iPhone 4 design much more than the iPod's. Any help is very much appreciated!

By the way I don't have an AT&T, Verizon, or Sprint SIM card. I have T-Mobile, which I don't know that works with the iPhone if T-Mobile bought AT&T or whatever I don't know.

You need to have a sim card in the device rather its an active or inactive sim card.