Samsung Galaxy Ace, SE Xperia X10 (need to wait for the upgrade though)...

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Added on March 31, 2011, 10:50 am

Galaxy Ace
Pro:
Large monitor (for the class)
possible Gingerbread update from Samsung
Con:
No Flash

Liquid Metal
Pro:
Snapdragon CPU (=Flash)
pretty nice build
higher resolution (though monitor size is around the same)
Con:
Practically zero support in XDA forum (this can be a real deal breaker, even though hardware is good)

another choice would be SE Xperia X10, and wait for Gingerbread update, or Motorola Defy...

Nexus S (has front cam but normal back cam), Incredible S (same like Nexus S), Xperia X10 (good back cam but no front cam), if u can't wait...

else wait for SE Xperia Arc...

Arc would cost around 2.5k on launch. IMO if you need the camera, go for the IS. The camera is pretty good.

Not necessarily. If you're the kind who likes to stay connected all times then yes. If you're not, you can get the 1gb plan and switch off your mobile networks in the options.
. A smartphone does things a dumbphone can't. Just because you can't stay online all the time doesn't null its capabilities.. Just reduces it.