I would hope so, since Jobs makes such a big deal about the music you buy being yours; being able to use your own music as a ringtone would be reasonable thingto do.
The 2-year contract is mandatory, unless you feel like paying the ETF. You have no option for a cheaper plan if you want to be able to use your iPhone to the fullest.

I own a T-Mobile MDA Vario. Did a three-way trade back in July, but effectively I got it for $200 (what it cost me to get the T-Mobile SDA origially). $55 for a pair of 2GB miniSD cards. Costs include shipping. So, $255 for the phone and memory.

I'm on a prepaid plan. For $40/month, that would get me 400 minutes each month. I really run closer to about 200 minutes a month; most of my friends use about 300 or so. Toss in a little extra, let's say 350 minutes. $35 a month. EDGE data for prepaid is free (There's a glitch in the system, asked a T-Mobile CSR a few months ago who said they know about it, but off the record it's not really affecting the network so they're not going to do anything about it for now). One year of voice and data (me), $240. One year of voice and data (350), $420. Two years(me), $480. Two years (350), $840

Total cost:
One year (me): $495
One year (350): $675
Two years (me): $735
Two years (350): $1095

This is with all taxes and fees included. My solution doesn't have all the nice polish of the iPhone, doesn't have the shiny photo management system, and it doesn't have MultiTouch. On the other hand, it has a physical keyboard, and no matter what Jobs might say, keyboards without tactile response suck, even ones with full-sized keys. In addition, my fingers are not small by any means, yet I have no diffculty navigating the MDA Vario without a stylus. In addition, I know for a fact that my phone can be unlocked (since I did it myself with lokiwiz; very handy free piece of software); Cingular is a pain to get unlock codes for, and are even more so with exclusive phones.

From my other posts, I hope I've made clear that what *I'm* interested is a balance between utility and price. There are *others* out there who share my views, people who keep a budget; the calculation is for them, just to give them pause; the commentary can be ignored. People to whom price is - regardless of income - no object won't care about such figures; fine. You maybe lucky enough to drop this cash/credit and not have any qualms about it; great. However, (and I say this in consideration of the average debt of American; you might not be American, or carry a balance on your credit card) some of us actually like not carrying a balance on credit cards. Then there's the group of people who *would* be budget-conscious, *should* be budget-conscious...but are easily distracted by shiny things. Don't laugh; that was me a few years before, and there are lots more people like that out there. There are probably a few who are reading this thread as I type.

To me at least, the iPhone isn't worth $500+ in shiny versus my solution and my solution is available right *now* on the network I want to use, which happens to be when I want to use it.
Windows Mobile has never froze/crashed on me. The only time I've had to turn it off/reset it is when I'm swapping a battery.