American iPone in Japan

It will work with ATT international roaming but will be incredibly expensive to use. You will not be able to use a Japanese SIM in your phone.

Yes, it will work. But, you cannot use it with a SIM card from the Japanese carrier (Softbank), since all iPhones sold in the US are carrier-locked to AT&T. That means you'll be on international roaming, and likely run up hundreds or thousands of dollars in roaming charges (I'm not kidding).

Honestly, you're better off buying a pay-as-you-go phone in Japan and using that for your calls. You can get them from vending machines on street corners. If you want to bring your iPhone, set it to Airplane Mode and leave it there, you can turn Wi-Fi back on and use that (consider Skype over Wi-Fi, for example).

You can also get a Google Voice number so calls to your US number can be forwarded to your Japanese phone.

If you really want to take and use your iPhone as a phone, see these:

http://wireless.att.com/learn/international
http://www.wireless.att.com/learn/international/roaming/iphone-travel-tips.jsp

A cheaper option would be to install the "Skype" App. At the moment, it only works with a WiFi connection, but according to the "buzz", Apple is supposed to allow it to work with a 3G connection as well in the near future. I just used mine in Barbados and it would only work with a WiFi connection. However, it sounds just like a real phone call.

The price? Try just over 2 cents per minute. AND, it's free to another Skype user. Skype requires a deposit (at least for non-Skype calls). I think the minimum deposit is $10. That's for around 500 minutes.

The problem with a 3G connection is that you would have to have an Int'l Data plan and they are NOT cheap. I think the entry data plan is $25 for 20MB per month. IF ATT allowed access to Skype via 3G, I haven't a clue as to how many KB per minute the clock would click off if you were on a Skype call via 3G. I DO know that an IP can burn a lot of MB per day IF data roaming is left on.