Just jailbreak and hacktivate and you are good. Use blackra1n and it will do both. No brainer... push the button on the screen when the phone is plugged in to the PC or MAC.. enjoy..
After you Jailbreak the 2G, you will then have to unlock it using BootNeuter in Cydia. Yes, on the 2G, you still have to unlock it to use it on AT&T prepaid. The 3G and 3GS phones are the only ones that don't need to be unlocked to use a prepaid sim.
Once that is done, you need to Unlockit - APN Changer for your iPhone on your iPhone and install the carrier file to your phone if you wish to use data to access the internet.