I've been doing this for 2 years. My setup is a 3GS with an iPad data plan from AT&T. ($29.99/unlimited). Talkatone hooks into google voice for incoming and outgoing calls. The app is free and I paid a token amount to make the ads go away.

Compared to apple's Phone and Messages, Talkatone is complete shit. It mostly works, all the while looking horrible and feeling worse. At least 25% of my incoming calls don't connect when I answer them from another app. The audio quality isn't great. (google's voice app is a bit better but it's still an offense to any decent iPhone app. And it only does texts and connects calls to your actual phone number with a callback.)

There are some hacky VOIP/SIP solutions for the iPhone. But having it call through google's servers is killer and offsets the horrendous UI. So thank you talkatone.