[themarty]

> If I take out the Sim card will it switch off the mobile network or do I have to disable it in the settings because I can't find anything in the settings?

I just bought a new Samsung Galaxy S2 and at the moment i'm only using it to control my XBMC, just like your friend :-) (until my new contract becomes active)
So yes: this is possible, because you can still connect to your wifi network.