I received another email from inside Iraq. I have no reason to not believe it is true. Great news on internet.
"There are a lot of internet cafes here and hour costs app 1.7-3 USD. The city itself is releatively safe for foreigners on low profile. About the room in hotel, the descent room will cost you app 35 USD, but you could rent a flat for 300 USD per months. The main problems here are powercuts (sometimes for 6 hours) and very hot weather (+ 45-50 without Aircon). "