Trying to complete setup after restore

Jennie...we are having the exact same problem! Absolutely the same (no water damage though).. this phone is blocked by the sim provider for non payments (boo hoo) but it was "unlocked" to any sim, was working until tried to update firmware. It should recognise the sim when inserted but it doesn't recognise any. I've tried to jailbreak with the latest redsn0w and it will not reboot afterwards. I can't downgrade either. It will only accept apple original software. Personally I think this is an odd software problem, I've looked at the sim slot and can't find any damage there as to why it can't recognise the sims. Changed the dock as it was damaged, new battery... This isn't an answer but I think the answer will be in an apple support forum for 3gs/ios5 or one of the software related groups online. If I find the solution I will get back..

ok.... think this is the way to go...skip to page 17, has a response about mr67617 or something on page 16..read what he has to say it sounds like it may be right.https://discussions.apple.com/message/16...