"My cell phone is dying a slow death and I'd like to get one with wi-fi capabilities so I can browse the internet (mostly to stream music) while I'm at home or at work. Dh suggested getting a phone that has wi-fi and I've seen some deals on unlocked phones at various retailers but if I get one of those and use my SIM card, will AT&T recognize it as being a smart phone and decide I need the data package? I really don't want a package, I can't justify the monthly expense."
This isn't a dumb question at all, but unfortunately it's also one without a single answer. How your provider handles smart phones depends on who they are and where you live, so your best bet is to get in contact with AT&T service and discuss it with them.
"Doesn't matter what AT&T thinks it is, it is still your decision where you spend your money. If you don't want a data package, you don't have to have one."
That may not be accurate. AT&T may not support the phone without a data plan (for an example, Verizon won't service a smart phone at all in my area unless it's got a data plan) so she may not have any choice with that provider. That's why it's best to ask directly.