We regularly get asked whether an old iPhone (even an iPhone 3) can be used as an iPod touch. The answer is usually yes.
What you want to do is turn off the phone radio so it’s not continuously looking for service, running down your battery. The way to do this (if your phone isn’t jailbroken) is to turn on airplane mode from the settings. But this also turns off Wi-Fi and Bluetooth, so then you can just go turn those back on (though the iPhone will still show the airplane mode icon).
But if the iPhone has been completely wiped, you may have trouble getting past the “activation” phase. Basically, you just need a SIM card from the carrier the phone was sold for, even one that’s no longer active, or a friend’s, and then it should work fine.