AT&T is pretty good about unlocking if you've been a customer for at least a few months. I've gotten unlock codes over the phone. The bigger issue is making sure your phone is tri-band (acceptable) or quad-band (best); if it isn't, unlocking it won't matter.
There's previous discussion of prepaid SIM cards in Germany.
http://www.flyertalk.com/forum/trave...nute-cost.html
http://www.flyertalk.com/forum/germa...e-germany.html
http://www.flyertalk.com/forum/germa...-1-99-day.html
Yes, there still are pay phones in Germany, but there are fewer than there used to be. Many do not accept coins--phone cards only (either via a toll-free access number or via a proprietary phone card with a chip on it). Some take credit cards as well, but the rates are quite high.