My kids are using an old iPhone 3G as an Ipod touch. Until recently, we were able to tap into WiFi for App Store purchases and updates. I brought it into Apple today-they did a diagnostic and said the water sensor is tripped and that could be the reason for the non-connection. They tried, unsuccessfully, to get into the Apple store WiFi. A soft reset in the store did not help, either. They suggested doing a factory restore and upgrading to 4.1. I did both-still no Wifi. Also, I couldn't get the phone out of the plug into ITunes screen of death until I installed my own SIM card. Is that normal after a restore? Any advice/thoughts would be appreciated.