i am new to mobile phone and iphone...i want a 32gig iphone but dont understand the logic behind being able to get a phone outright if its locked to a phone company???? isnt that the same as having a monthly plan at the end of the day?

well technically i have a $20 prepaid with virgin it is out of contract and i rarely used it, but want the 32 gig version for the apps music and phone option. so want to get close to the $20 month deal

Having a phone 'locked' to a telco only means that you can't use SIMs from other telcos in that phone. It's nothing to do with signing a contract and receiving bills.

If you buy the iPhone outright from an Apple retail store, it is completely carrier unlocked, so you can use it with any SIM that you have.

Sometimes telcos will offer 'outright' phones that are carrier locked. I think Telstra do this with the iPhone, whilst the others only offer it prepaid with a SIM and credit. I suppose the logic behind buying a phone outright that's locked to a carrier is that you don't get a SIM prepaid pack with it (no SIM, no included recharge credit) so if you're already with that telco, you can just use your existing SIM, or if you're not you can sign a new contract with them and not have to pay monthly handset repayments.

i went yesterday to Flinders St Mac store and asked if I could buy it outright unlocked they said i could buy it locked to telstra

also there seems t be quite a lot of issues with the iphone 3GS if you read whirlpool
Who has ISSUES with their new iphone 3GS - iPhone - Whirlpool Broadband Forums

this has me a little worried