Can I add a ringtone to iPhone?

Yes check out Myxer.com mSpot.com , Playphone.com and SendMe.com.

How to create an itunes account without credit card.

http://support.apple.com/kb/HT2534

key thing is trying to download a "free app" to get the prompt to create the account

Which iPhone Model i should get?

If you have money go for any 3 GS model. If not, go for Iphone 3G 8gb model.

If are really strapped on money, buy a refurbished one. Refurbished iPhones from Apple carry same warranty as new ones. If thats not possible buy used iPhone. A used 4 gb iPhone 2G is better than any other smartphone brands available

Do I need to buy internet plan

If you are not getting internet, please do not waste your money on an iphone.

Data Plan/ Internet plan

Do yourself a favour, if you have invested this much money in a iphone get a good data plan. Iphone is worthless without a good data plan. Ideally you NEED an unlimited dataplan. Unfortunately in India we have few such plans. Even Airtel and Vodafone are not offering such plans. However, you can unlock and switch to BSNL and take BSNL postpaid unlimited dataplan which is just 200 rupees per month.

Will my iphone work with BSNL?

Yes, Iphone works with all GSM providers including BSNL, Airtel, Vodafone. However current Iphone models will not work with CDMA providers like Reliance.

Can I unlock my iphone?

Yes as of today, all different varieties of Iphone can be unlocked. It is a simple free software installation which takes less than an hour.