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Can I use a modern Android phone with no phone plan?

I'm new to the Android platform, but am looking into doing some development for Android 2.x, with the hope of publishing an app to the Android App Market eventually. I'd like to be able to test my app on "real" hardware, but I already have an iPhone, which is plenty expensive itself, and I don't want to pay for an entire second cell phone plan just to test my code. So my question is, is it possible to buy an unlocked Android phone and operate it entirely over wi-fi? If so, what features (besides the obvious, like making calls), will I be missing out on?