It's been a long time, so I had to search Apple's site. But it looks like you can register as an Apple Developer free here:
Register as an Apple Developer
Registered Apple Developers can build apps and test them in the iPhone and iPad simulators. But if you want to test your apps on actual iPhone / iPod touch / iPad hardware, you need to pay the $99/year to become an iOS Developer Program member. (And of course, you must become an iOS Developer Program member to submit any apps to the App Store.)
There are other benefits to joining the Developer Program. You will get early access to OS X (maybe?) and iOS beta releases, access to the Developer Forums which are full of very useful threads, etc. And you'll be able to access iTunes Connect, which "provides tools to help manage your content in the App Store" in their exact words.
The simulators are very good, but they don't simulate things like your iPhone's Camera Roll, bad AT&T reception (LOL), certain types of iOS system warnings, etc. Testing on the simulators is just the first step.
Hope this helped.
Note that the iOS Developer Program membership and Mac Developer Program membership are separate. $99/year for each.