Yes you can cancel the Data portion of your plan, I just did it a couple of weeks ago.
The contract you signed was to remain an AT&T customer for two years, not keep extras like data plans on your account (according to an AT&T rep, who at first told me I could cancel the data plan ,but would have to switch to using another phone.) It took four calls before I got someone that just said sure you can cancel the data and continue to use the iPhone, however you will lose Edge , Text messaging and visual voice mail. The only thing I miss is the Visual Voicemail, but I never used the other two features so I'm doing just fine without. You can still connect to any wifi hotspots and get online. So my advice is if you first get a no, keep calling until you get a yes.