Actually, the original iPhone (iPhone 2G) can be unlocked through Pwnage Tool or Redsn0w. Once you have it unlocked, just put the sim card from your child's old phone into the iPhone (you insert it through the top of the iPhone, just use the tool that came with your 3G or 3G S to get it out).
If your giving your child an iPhone 3G, you will have to wait a little bit longer for an unlock. The Dev-Team is working very hard to try to get it out to the public ASAP.
Either way, you will be able to use the $10 plan. It costs an extra $10 a month for unlimited data. So, if you don't want to pay the extra $, make sure your child knows what apps to use and what not to use. I just had this problem with my mother's unlocked iPhone and she ended up racking up a $134 bill. Now, although both plans add up to $20, the plan for the
ORIGINAL iPhone is $20 plus an extra $10 for the line. The 3G is $30 plus $10 for the line. Ultimately you will save money by unlocking. Just make sure you read up on all the facts about unlocking so you don't wind up RE-locking your phone through a firmware upgrade or something. Also, and I can't stress this enough, if you don't want to pay the $10 extra for the unlimited internet access through AT&T's MediaNET service, make sure your child knows what apps
CAN"T be used!!
I hope you find this somewhat helpful. Here's the link to the
Dev-Team's site. If you don't know how to unlock, there are plenty of tutorials in these forums.
iClarified.com has some good tutorials too!