What Are my Options for Getting My iPhone Activated?

I just received a used iPhone 3GS from a friend. It’s got an AT&T SIM card in it, and it only shows me the “plug me into iTunes” animation on the screen.

What are my options as far as getting this thing turned on? I don’t want a contract, and I’d like to move my number from Verizon to this phone. I consider myself tech savvy, but mobile phone service and activation, etc. is not my thing, so thanks for any help.