HELP: Converting iPhone to iTouch via DFU restore

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I have a 3G iPhone (iOS 3.1.3, JB with Spirit) that needs to be restored via DFU. I had to replace the battery and it's been acting wonky so I'm converting to into an iTouch for the kids.

My questions:

1) In shift+restore, I attempted to update with 3.1.3 firmware but kept getting an iTunes error 23. Since iTunes is recognizing the 3G as an iPod in DFU, should I attempt to restore with iPod firmware, instead of iPhone firmware?

2) If yes, which version iPod firmware should I use? I would like to JB as many of my apps for the kids are JB apps.

I'm going on the hope that with a restore, I'll finally get out of the red battery+lightening bolt screen. The new battery won't take a charge no matter what I do and it's driving me crazy. If this doesn't work then I guess my next step would be to get a new usb port.

Unless someone has a suggestion for me??
 

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