What?! I don't know... they may confiscate the device. So if you were to go and buy a new iPhone 4 right now, then immediately come home and cancel the contract, what would happen?
It'd be $199, with no fees/charges? I'd doubt this. An ETF is either charged or you must return the phone.
Yes, if you cancel within 30 days you have to return the phone. If you don't AT&T will charge the full retail price to your CC.