gtxboyracer: Not true, this only occurs if you purchase from an AT&T store. If you go to an Apple retailer they will sell you an iPhone outright without a 2 year contract. You just need to take it then to a repairer and get them to "unlock it".
My brother was over in San Francisco in April just been - and the Apple store staff told him a suitable repairer who would unlock the iPhone for ~$50USD ($60-70 NZD).
Is it "properly" unlocked or is it a hack? In other words, will he lose the unlock when updating the OS?