Here's my suggestion. Get a regular ATT family plan. For the line that'll be upgraded to an iPhone, just get whatever's free. Then go buy an iPhone and upgrade that line. Easier and your friend'll also have a backup phone that he can plug his SIM card into if, say, his iPhone's in for some repair if needed.
Then, your friend would be paying about $90 per month (we have three lines, two iPhone and 1 regular, we upgraded two lines and added a third, and we're paying about $110 per month).