It is possible to buy a used phone, or pay out the ear to get an unlocked/unsubsidized phone. You might even be able to get it to work if you Jailbreak the phone, Unlock it, mess around to get YouTube and Push and what ever else breaks working again...
OR
Just buy a brand new iPod Touch. The camera is not quite as nice as the iPhone 4, but it's thinner, lighter, A LOT CHEAPER, and with Skype and other Apps, you can use it as a phone anywhere there is WiFi.
Get a $19 Walmart flip phone on a $8 / Month pre-paid plan and an iPod Touch.
Heck, you'll have enough money left over to buy 2 flip phones, and 2 iPod Touches. Get one for your Sister, she'll love you.