No, you can only enter phone numbers (no names) manually into the one-touch dialing slots. If you do it this way, the phone numbers will be displayed when the car is stopped but they are blanked out while the car is moving. Not terribly useful unless you have a great memory.
You do not need a service to use a phone as a Lexus phonebook loading device. If you decide to go this route and buy the phone and SIM card separately, make sure they are compatible (i.e., from the same service provider, e.g., AT&T, Cingular). Again, you don't need to buy the service, just the phone.