I want a cell phone with wi-fi capabilities that does not require me to pay the extra internet fees. The AT&T people tell me that I can get a phone with Wi-Fi, but I still have to pay the $40 or so per month for internet browsing through their network in order for the Wi-Fi to be activated. How can I get around this? Heck, my kids PSP does this.

thats not true. if you have wifi, then you can get on any wireless network for free.
now perhaps you are talking about a specific phone that you want to buy that is subsidized through att, then youll more then likely have to pay a data fee.