This actually reminds me of a pre-paid issue I've seen where the device is out of service but it must be some kind of soft disconnect because the device still rings for incoming calls and acts like it is going to let the caller call out. One of the times I saw this, out going calls were met with a notice to refill minutes or instructions on how to restore service. Another time it was just as described with the exception that the user could still send and receive texts, however I believe in that case the user knew the service was interrupted but due to whatever soft disconnect that was used SMS was still worked.
I'd start with your service and your carrier, if you find everything OK on that end get back with us and we'll attempt to help you from there.