shyams: for the UK iphone, the phonebook sim will unlock not just activate. It is because the phones are factory unlocked BUT when bought they are tied to a certain carrier. I actually worked on one. The at&t sim wont just unlock them. You either need a sim from the carrier it is tied to or an open sim without a pin such as the phonebook sim. It is a unique problem only with the UK iphones.

I got an iphone 4 from France and an at&t sim unlocked it just fine but not the UK phone.