Sorry for the late reply guys.
First off, I appreciate the advice.
I guess the AT&T rep was lying when he said my friend couldn't sell his iPhone. He is going to sell it on ebay soon. He was able to talk down the price on the Bold a little ($499 and a FREE case, woohoo!
Once he gets the Bold (the store didn't have any, should be in tomorrow) and he is good with it, he is selling the iPhone. Looks like everything is working out well so far.