iphone/ipod touch functionality in japan
 

My situation:
Going to study at Waseda university from September to July, then returning home for my senior year of college. The iphone/ipod touch both look really nifty to me, especially with the kana/kanji entry functionality of the 2.0 software, but the year abroad/year home, combined with the apparent two-year contract required for iphones, makes it seem impossible (or at least impossibly expensive) to use an iphone in japan. I guess this leads to a few questions (and I may need to simply ask these again in a few weeks once the apps store matures and people play with the devices and 2.0 software a little more):

1) Has anyone ever transferred an iphone or its contract overseas? Do ATT or Softbank have any partner companies that would facilitate this?
2) How is the Japanese functionality on the iphone? Can it replace a keitai and a denshi jisho? Or am I better off with each individually?
3) Are there a good number of Japanese apps for the iphone?
4) This one's a general cell phone question: Is there a way to avoid the choice between rental fees and $400-$500 for a phone? could I buy one in the states or order an unlocked one from ebay, then use it with a softbank plan once I'm in Japan?

In regards to question #4, the cheapest alternative is probably getting a Softbank prepaid phone, but they sometimes aren't the coolest models.
3G Prepaid Service | SoftBank

I've just changed to softbank earlier this month.. I've made inquiries about the latest model which is iphone and the information that I received really piss me off.. it is said that when you purchased the iphone, you must also apply for the internet application which will cost you around 5000 yen a month.. and if you want to pay the mobile each month, there will be a total around 10000 yen for you to spend.. that is sick!!

When the Iphone was introduced in America, you also needed a data plan, as well as a 2 year contract.

Japan's Iphone does not come with a removable sim card, which means using it with another carrier besides Softbank will not be possible (at least for the moment).

Your best bet is to get an American AT&T 8525 or "Tilt". This phone is unlockable, and you can use a Softbank sim card in it. It has many more features than the Iphone, though it is somewhat more expensive. Softbank sells the same phone in Japan under a different name, but Japanese versions are not unlockable.