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I'm considering purchasing a Nexus S in the next few days. I'll definitely NOT go with a contract. I have a ToGo SIM I can put in the device and buy minutes as I need them. Since I use Skype at home and work and ToGo minutes discounts abound, voice usually costs me around $200 a year. For data, it's amazing how many free WiFi access points there are these days. When I'm on a trip and need data on the go, I have a Virgin Mobile MiFi 2200 router for which I can purchase 100MB of data for 30 days for $10 or 5GB for 30 days for $40 (used to be "unlimited" but Sprint is getting realistic in their data offerings). By putting up with a little inconvenience I've brought my total service costs to less than $300 a year with no bills, taxes, or fees. That allows me to spend where I appreciate it the most, on the phone.
P.S. I see the phrase "unlimited data" being bantered about. Read the contract: unlimited data means unlimited e-mail and web browsing. That may be enough for most but make sure of the consequences before you attempt to replace your wired broadband service with your phone!