I have iPhone 1.1.1; The problem is I am not able to connect to any WiFi using my iPhone.

Below is what I tried till now.
I created a wireless network thru my laptop using ethernet internet cable connected to my laptop. I made the local connection as "shared" to my new wireless connection. I named the new wireless connection as iPhone-Net and used WEB password.

I go to Setting -- WiFi on my iPhone. Here I can see the new connection "iPhone-Net". When I connect, it asks me for WEP password, once I provide the same and press join button, it says "Unable to connect to network iPhone-Net". Now again if I click join button it does not show the same message.
After this I can see WiFi Icon on top and also a tick mark on iPhone-Net network.
Now when click the home button and again navigate to setting--> wifi, it shows WiFi not connected and on top the Wifi icon disappears and "E" appears.

If I try directly opening Safari, it prompts me to select wireless connection available. here whenever I select iPhone-Net network it says "Unable to connect network iPhone-Net"

Please advice.