Macworld recently wrote an article about the various ways to reuse or recycle your old phone. Here's a summary:
- Pretend it's an iPod Touch: Even without the phone function, an iPhone can still connect to Wi-Fi, play music and take photos.
- Return to Apple: If your iPhone is in decent shape, send it back to and receive an Apple Gift Card equivalant to the device's fair market value.
- Sell it: Depending on the age and condition of your phone, you might be able to sell it to a third-party reseller (always a good idea to do your homework first and verify that they're legit). Alternatively, many people have had good luck selling their phones locally via Craigslist. Just make sure you first strip your phone of any personal data.
- Pass it Along: Consider donating your old phone to a friend, family member or local charity. Again, just make sure any personal data is deleted first.
- Jailbreak it: This one was new to me, but jailbreaking a phone allows the owner to fully customize the device, granting complete access to the entire file system and the ability to add any programs they want. Just beware, jailbreaking can void any warranty or existing contract you may have with the phone.