Just to clarify, do you use the passphrase or key when trying to connect to a locked network? And I just checked, all my DHCP options are "enabled"
Sounds like the router has MAC address filtering turned on. Your iPod touch won't work on this network until its MAC address is added to the list.
If your device isn't on the MAC list, the router will let you on the network and may even give you an IP address, but won't pass any data to/from the network.
Also, the amount of money that you'd save could be as low as $180 ($15/mo x 12). You may also want to wait a month to see if Verizon gets the iPhone.