Don't go with the iphone. As cool as it is, AT&T/Cingulars customer service is shit. I had them for years and they screwed me so many times. The first time they did I was looking for a new phone, and they told me I need to get digital because their analogues would be out of service within a year, so I bought a shitty digital phone that I didn't like, when I'd have spent just as much on an analogue I did like. Oh, and they worked for another seven years anyway.

The second time I decided to upgrade from that phone after two years. The sales rep took my phone. When I demanded to know why he was taking my phone the manager said under the terms of my contract I had to forfeit it for my "deal" to take effect, and since I already signed the contract I had to do it. Later I found out they took my phone to sell on e-bay.
Then the liquid crystal display on my new phone blew out, and AT&T informed me I'd have to pay $50 for my replacement phone, which turned out to be a refurbished piece of shit. After constantly having this phone cycle off/on or freeze for a few months, I was informed that if I wanted another replacement there would be another $50, so I turned it down and went to Verizon, paying the $275 to get out of my crappy contract. Best move ever. After a few months of problems with my phone, Verizon said they'd send me a brand new phone and credit my phone bill a month, even being apologetic about it.