Replacing lost phone with one off ebay

I just recently lost my phone. It was a razr v3, and I'm in a 2 year contract with at&t, just about half way through it.

Is it possible for me deactivate the lost phone, buy another razr v3 off ebay for $50 or less, and then buy a at&t sim card and activate it? Would this work, would I keep my same number, or am I completely missing some key important factor in this logic?

All you need to do is buy the phone off of ebay and go to a local AT&T store and tell them you need to activate and replace a lost or stolen phone. They may charge you for a new sim card, but you can keep the same number. If you are not near a store, you can do it over the phone, but they will need to send you a new sim card. Be careful buying sim cards over ebay, sometimes they are already expired but never activated. I had that happen one time.

Call to suspend your service immediately. You are responsible for any usage before you notify the carrier, except in California. The SIM card in your lost phone will be deactivate but there is nothing the carrier will do to stop someone else from using the phone with another SIM card.