The end of a long story is that I have an 8GB iPhone. Now being the happy owner of a far superior product for communication purposes (the Nokia N95) I had been using my iPhone as an iPod happily. Last week it wanted to install an update (1.1.4) which effectively locked me out of the unit unless I authorized it onto AT&Ts network. A quick call to Apple's tech support confirmed that without an active contract on AT&T the iPhone will not function at all. Sorry Apple I thought I actually owned this device, silly me, apparently I'm only using it at your pleasure.
Some heavy Googling turned up a lot of information on hacking (or jailbreaking) the iPhone but most was pre-the latest update. Then I came onto this gem of a Wiki. 10 minutes & a small amount of geek'ness later I am back in possession of my iPhone-Pod with a bunch of new features to boot & no $ to AT&T. Hey Apple, this is what customers do when you trample on their rights, get used to it.