Engadget got it straight from the donkey's mouth . They spoke with an AT&T spokesperson who confirms the long process of being required to activate the 3G iPhone in an Apple Store or AT&T Store before leaving the store.
Chris asks: Can these devices be purchased and given as gifts?
No. You will need to walk out of the AT&T or Apple store with the device activated.
It might be a good idea to not wait in line on launch day to ge the 3G iPhone. I know someone who was 507th in line @ the Apple 5th Avenue Store on the 1st iPhone's launch. Even if they manage to activate 3G iPhones within the estimated 10-12 minutes they are stating (if everything goes w/out a hitch), that still means many, many HOURS of standing in line on top of the hours you'll already be waiting in line before you purchase and activate the 3G iPhone.
When Rocco and I waited in line on launch day for the 1st iPhone (Apple Store @ Short Hills Mall in NJ), we waited almost 6 hours until the iPhone went on sale at 6pm. We were somewhere between 55 & 60 in line (can't remember the exact number), when finally let into the store to purchase the iPhone (no activation time required) the process was under 5 minutes.
I can't even begin to imagine how many hours it will be for people that are 500th in line. Hopefully Apple and AT&T will realize that in store activation will be too long, let alone possibly hazardous making people wait on line longer on July 11th in the summer heat.