I'm currently an iPhone developer that is just starting down the path of Android development, with several existing apps I want to begin porting.

That said, I'm piecing together my Android development environment now and was curious as to whether there was a de facto "best development handset" to use for testing during development.

Something relatively cheap and can be had sans phone service contract would be ideal.

Thanks for any and all help! I'm really looking forward to plowing into the platform and SDK.

The emulator is pretty good so you could cover almost evering thing up with it.
But when its coming to GPS or Sensor testing theres no way around a real device.
I would suggest a G1 aka Dream.. its cheap and it covers all hardware thats around
on in the moment on the android sector.