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HI if the iphone 3g 8gb is locked to some other network provider then it wont accept your network sim until you unlock it .You can easily unlock your iphone 3g with the help of providers like TheUnlockArena.com here they are rendering remote unlocking service to unlock all model iphone from network lock .....You first verify that whether they are rendering service for your country and network provider .If yes then pay for it and unlock your iphone..
Im assuming your iphone screen is cracked and you failed to mention that. It is a problem with your digitizer. Search your local craigslist.org for people to fix iPhone digitizers, it will cost you about $50
First try a hard reset. Hold down the power and home button simultaneously for 10 seconds until the iPhone reboots.
If that doesn't work you need a new digitizer. If it's a 3G I would advise replacing the digitizer. If it's a 2G I would not advise replacing the digitizer b/c you would have to replace the LCD, Digitizer, and the Glass Panel and the cost would exceed $100.
You could also consider selling your iPhone AS IS for parts or repair on eBay, Craigslist, BuyMyTronics.com or I could make you an offer.
Hope this helps, Rate me please!
I recently had the same problem. You can buy the glass by itself (which you already know), but then you would have to chisel away all of the glass from the digitizer which is really risky, difficult, and may ruin the digitizer in the end. If your dropped your iPhone 3G and the glass cracked, you will need to purchase a new glass display AND digitizer. They will come together as the digitizer will already be glued to the glass display. This will cost you about $70 before shipping. If you are doing the repair yourself, you may want to consider getting a pry tool to help you take it apart (about $4). There are some youtube videos by PDA parts that show you how to take apart the phone. I ended up getting my glass display and digitizer from Mission Repair, as it comes with the adhesive strips you will need to afix the display to the frame. I got my pry tool from PDA Parts. Due to the lack of information out there about what to do when the glass on your iPhone 3g cracks, I ended up making a website to help people out. Soon I will have a video tutorial and as well as written instructions with pictures on how to replace the glass and digitizer yourself. The site is http://3gcrackedglass.com Good luck with the repair!