I am sure you can cancel the data plan and use iphone4. It does not matter if your contract is off or on. The only thing you have to do is call them and say that you lost your iphone and that, now, you are using a simple phone set, not a smartphone. They will ask you what kind of phone you are using, so better find one old phone and give them the IMEI number. The IMEI number of the phone can be found  hen you take the battery out from it, somerwhere near where you insert the SIM card. I have done it, so it will work.