Can you change an iPhone to be an iPod Touch, so you don’t have to use cell phone service?
Use Your Old iPhone as a iPod Touch
use an iPhone as an iPod Touch unless it has previously been activated as a
phone, and you have the deactivated SIM card last used in the phone.
use an old sim which is not in use to activate via itunes.
read : http://support.apple.com/kb/ht3406
You can't really "change" the iPhone into an iPod touch but you can use it like one. The easiest way would probably be to simply take out the microSIM. This way there simply is no cellular network or service on the device.