The DMCA specifically excludes unlocking cell phones for personal use. There is nothing illegal about it and the TOS isn't applicable until you ACTIVATE the service with ATT therefore making that a null and void point.
Weapon-X: Be careful with firmware updates as they may impact your ability to continue using the service off of ATT. Check the apple forum at howardforums, they users there are pretty good at confirming this stuff.
I have the iphone and its probably the best phone I've ever had. Edge however sucks and ATT's service is no where near as good as Verizon's.
There are some naunces I would like to see improvements on. I have hundreds of contacts between work and personal and you can't sort by catagory in the phone. I'd also like to see tasks and notes sync'd with outlook. Oh, and occasionally, I do miss the FF and RW buttons for the ipod player.
Enjoy!