Really? A contract even if you pay full price (unsubsidized)? I would call (AT&T) again to confirm. The point of having an unsubsidized phone is so you dont have a contact. Perhaps some stores don't want to sell an unsubsidized phone or the sales agents don't know how to process such a request.
Originally, I thought about an iTouch vs an iPhone. But, for the cost, it was cheaper to buy the iPhone instead w/contract. I can't wait for 2009 to see what the competition will bring out to compete with the iPhone. Samsung Oneia is one to keep your eyes out for as well as some new ones with Nokia.
But AT&T and likely everyone else will still suffer growing pains with problems on the 3G network like slow speeds and dropped calls.