iPhone Questions

the iPhone is friggin brilliant. i really want one. but, due to cingular having absolute craptastic service in my area and also me being still in contract with alltel for awhile yet...alas it is something i cant get as a phone.
however it has many other functions that are not phone related. i was wondering if anyone had an idea of how much (if any) of it will work WITHOUT a service plan. take for example would the internet work if i was near a wifi hotspot? id think it would unless it was locked out. how about the gps portion? im sure that would require a contract of some sort.
the iPhone looks like it would be a very nice PDA that made one heck of an iPod as well.

also, since it runs OSX im wondering how hard (and if apple even allows) it would be to develop software for it.