I personally hate gift cards and calling cards, but I think this suit needs to fail for several reasons:
1) The consumers that bought the cards paid for minutes. They did not deposit money on their cards, and minutes are not legal tender currency.
2) Many gift cards don't carry expiration dates. If the governments do this, it will force card issuers to put an expiration date on the cards.
3) Success in this litigation will embolden other governments that are looking for ways to close budget shortfalls without doing the fiscally responsible thing and cutting wasteful spending. Unfortunately, the first place where most governments choose to cut spending, instead of looking for waste, is in the school districts, police and fire precincts. Threatening cuts in those services makes it easier to justify doing stupid things like this, or raising taxes.