After your cell phone contract is up, can you just use it as an ipod touch? or will it cease to work without being a network?
It's hard to be too certain since no one has managed this yet. The first contracts won't expire for another 5 months or so.
iPhone's require activation (which an iTunes software security thing) and are SIM locked to a network. Once the contract is up, if you cancelled with AT&T but continued to use the SIM from AT&T, it might work... or it might stop being activated. I'm not sure if anyone knows. AT&T has said that they will unlock them, and this implies that they will be activated even on other networks.
In either case, you can always hack the iPhone to unlock it and "hacktivate" it. And then for sure you could use it as a Touch.