1. before I can recommend you a phone.. you have to define what 'cheapest' means to you... say some price
2. lol.. anyway all phones have basic features these days (except iphone

sorry guys cant resist )
3. I think you are asking which carrier is best

airtel has good coverage acc to my friends.. I used vodafone but no probs in connection
4. GPRS is way to browse net in mobile... u need EDGE to browse net in PC by using mobile as a modem.. I dont think anyone is offering free GPRS I use to pay Rs50 per month as rental for GPRS(vodafone) and 10p per some amount of data transfer if data exceeds allotted bandwidth but now I have stopped so dunno current price
5.browsing the internet with mobile is not that enjoyable experience unless you shell out some $$$ and get a phone in the range of 15-20k with big screen. I know this cos I use my K550i to browse sometimes and it needs too much patience even with an EDGE connection (faster than GPRS) though opera mobile saves some frustration
6. max 112kbps using EDGE and speed depends on signal strength
7. browsing web from mobile and browsing web in PC using mobile as a modem are two different things are charged as different service by the carriers... browsing web in mobile is cheap (Rs.50 - 100 pm) but browsing net in PC through mobile phone costs around Rs.500-600 pm
8. a BIG YES
9. hutch was giving unlimited GPRS but that was a long time ago when GPRS was not popular
lol at your nokia 1100 but thats a very rugged phone though small in size