Easy, if you want to virginize your iphone all u need to do is, open settings and set the AUTO-LOCK to NEVER, than put the At&T SIMM Card That came with your iPhone, Now open installer and add this source to your installer
http://i.unlock.no after that install "The Virginizer" Under "Unlocking Tolls" category, when its done, just restore your iPhone to 1.1.1 by holding "Shift" (or "option" if u use mac) and click restore, MAKE SURE U SELECT THE FW 1.1.1
Once restore is done, you can sing your contract & activate your iPhone with itunes than you can update to 1.1.3