question about repair. iPhone

If a first generation iPhone, did your friend purchase an iPhone 3G?
If so, Apple would not have taken his iPhone in exchange for a new iPhone 3G.
And depending on the overall damage and if a first generation iPhone, Apple may not take this iPhone in exchange for another first generation iPhone at the $199 price for the exchange.
Copied from this link.
http://www.apple.com/support/iphone/service/faq/#warranty7
For example, an iPhone that has failed due to damage or liquid damage is eligible for Out-of-Warranty service. However, certain damage is ineligible for OOW service, including catastrophic damage, such as the device separating into multiple pieces, and inoperability caused by unauthorized modifications.
Apple reserves the right to determine whether or not your iPhone is eligible for Out-of-Warranty service.
And if this iPhone is no longer activated with AT&T, Apple may not exchange the iPhone for the $199 price regardless.
Message was edited by: Allan Sampson
 PowerBook G4 17-inch/1.67GHz/2GB RAM Mac OS X (10.5.6) 7200rpm-100GB HD,  iPod w/Video 30GB,  iPhone 3G 16GB

yes, he got the Iphone 3g instead. The one that he gave me is great condition no scratches on the back or anything. I checked for water damage, there isnt any either.
currently its activated under my account right now. So I am guessing it should be fine since I answered all the concerns you posted?
Windows Vista