If you are already on AT&T's service, buying the Iphone is a waste, it only used the old GSM network for data transfer, where as the newer phones use the 3G network. So if you are using the internet or e-mailing its not worth it, where as if you are only using the wireless internet then its worth while....
As for the MP3 question, I'd just buy a simple Iriver and forget the phone. Its not worth spending 2-300 for stuff you don't really need.
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