EDIT: *****, nvm. According to the AT&T return policy (
here) you can cancel w/in 30 days and if you keep the equipment you just have to pay full price (and I'm fairly certain the iPhone isn't subsidized, so you shouldn't have to pay any extra). According to Apple, once it's been activated you can use any recent AT&T sim card. I think you're required to use iPhone plans though, so I would go for pre-paid.