Restoring new iPhone from iCloud backup deactivates old iphone? I gave a friend a new SIM card for her unlocked direct from Apple iPhone 5.

She put the SIM in, and went through the setup process, restoring her iPhone 5 from an iCloud backup.  At this point, her old phone lost all signal and refuses to connect to any carrier.

She did not go through any activation process specifically as you would on a new phone, but I think that what has happened is that the activation has occurred as part of the restore process, and that this has somehow deactivated her previous phone.

Can anyone clear up what the activation process does, if it can be done automatically as part of a restore, and if this is what happened tell me how I can re-activate her old phone without a factory reset?
This is most likely the carrier intentionally deactivating the old SIM.

When iPhones first came out, your current phone would normally get deactivated at the moment you purchased a new phone and told the carriers to move the service to the new phone. Now, they wait until the new phone checks in to perform the swap to account for delivery delays, backups, etc...

Your first step should be to contact the carrier and explain that you want service on both phones and arrange for which number rings to which device. They might be able to accommodate this over the phone, but if the old SIM has been deactivated in the networks, most carriers are very unwilling (or unable) to re-activate the old SIM and instead ask you to get a new SIM from them at a convenient local retail spot or by them shipping you new SIM card(s).

Apple's restore process and activation of the device doesn't affect network activation and for locked phones, you just need a SIM for the correct carrier to activate the device. iOS does not check or care that the contract is expired, not established or live for iOS activation - just that the SIM is manufactured for the correct carrier.