You don't have to sign up to a contract apparently, however you're probably better off taking an iPhone contract unless you plan on JailBreakin the phone as it uses EDGE and GPRS which if you haven't got a data package would rocket up your monthly bills.
If you are taking out a contract take one out through quidco.com and get £100 cash back.
I think I'll hold out for the iPhone2, as every update they've done on the iPods are awesome, so I can't see them mucking up the release of the iPhone2. Hopefully it'll be a tad smaller