I know the answer, and I've been trying to post for days now, finally let me.
If you have having an error telling you that it could not activate through EDGE, and your iPhone SAYS its connected to wi-fi, and you gave your router WEP hex-key to the iPhone, for some reason or another, the iPhone is not actually connected. it prompted you for a password, and you gave it a hex key.
What you need to do is set the hex-key not the password for your wifi. To do this, go to -->Settings-->Wi-Fi-->touch the blue arrow key of network your connected to-->this will bring you to the settings of your network-->tap "forget this network" (this will allow you to be promted for the password/hex-key again)-->confirm "forget..."-->go back to Wi-Fi networks-->tap your wi-fi network you wish to connect to-->in the security box, tap the blue arrow (this will bring you to the setting for WEP password or WEP hex or ASCII)-->touch WEP hex or ASCII-->tap back to password-->finally tap in your WEP passkey.
You can confirm that you are really connected via wi-fi because the iPhone will report a router and a DNS number. if it does not, You are not really connected to wi-fi, even though the iPhone wi-fi symbol will be showing at the top.