"You are not subscribed to the EDGE network" is the message facing the affected users. Subsequent calls to AT&T have resulted in a mixed response. They're aware of the problem and generally offering a change of plans as a solution. The options seem to involve restarting your monthly billing or paying by the kilobyte, which is likely not a prospect most previously content GoPhone users are looking forward to.
Update: Despite earlier assumptions by myself and users who first reported the problem it is not the 1.1.3 update that is causing the GoPhone problem, but rather an apparently coincidental server crash. AT&T support is offering a limited quick fix for some users, but is working on a long-term solution.