i bought my iPhone4 without a contract, cost me some cash upfront but in the long run i don't have any ridiculous monthly fees.
the best part: the phone is sim unlocked, making it a fully functional gadget anywhere in the world, without any limitations by any carrier (yes, internet-tethering, i'm looking at you.)
i cannot understand why everyone is such a sheep and goes for the contract rather than the truly free variant. maybe $800 seems a bit much for a phone right upfront, but then you shouldn't be getting the phone in the first place, as it will cost more over the next 12 months...