Public transport in Iran is very cheap. Normally long distances are so far cheaper than local public transportotion in most european cities.
The concept of (free) hitchhiking is mostly unknown to the majority of Iranian people. The only exception might be youngsters (or elders) who had traveled, hosted or met westerners.
If you decide to go for it though, it can be one of the best experience you'll ever have. You will be surprised by the extreme kindness and hospitality of this people (you can even hitchhike taxis inside cities by chance..).
Be aware of; do NOT thumb, it is extremely vulgar (equivalent of western middle finger..) and simply not understood; and talk to people before enter the car, be sure they accept to take you without money ("Khoob ai bedoona pool?"). A minimal farsi is definitely required if you want to hitch and not having bad surprises.
While Fede was hitchhiking out of Tehran with a panel saying "no taxis, no shared taxis, no buses" he had been approached by a very kind man who tried to explain him that "there are no trains nor planes here, where are you going? Esfahan? The airport is that way...".
Iranian hospitality will surely surprise you. Almost anyone will welcome you at their house, old, young, men, women, no matter who, iranians have a deep sense of hospitality and will treat you as a king wihtout either have the possibility to spend a cent. Food, sleep transport, even if they earn in one day less than what you can easily earn in one hour in Europe they will insist to invite and pay you everything; up to the local bus drivers and internet cafes holders.
Finding a place to sleep in Iran is generally as easy as knocking the first door you come across. If you get tired of the unrelenting hospitality however, the city parks offer an excellent alternative. Many parks, even in big cities, are designated as camping zones, with toilets open all night, sometimes also shower and wifi. Camp fires are tolerated, but it's best to ask before.
These parks are called park muzaafer (پرك مسافر), which translates to traveller's park. Though in some cities (e.g. Hamedan) there are clear panels showing "forbidden camping" and policedo come to unset tents (often used as nest by couples young or not); arriving late at night and setting off the tent early in the morning you will avoid any annoyance for sure.
Sleeping in mosques is also possible, even though you should ask for permission beforehand. In this case, make sure you respect the segregation of sexes when travelling as a couple. Harveypekar slept in a mosque close to Mesr, only to overhear the Imam the next morning, explaining other travellers that it's impossible to sleep in the mosque. The imam was friendly enough though to show the other group the other side, as to leave him sleep his fill.
It is possible to camp in the deserts as well, but be sure you cannot be seen from the road to prevent attention from the authorities. They can send you to jail for being on some site you're not allowed to be on. Note that while the desert might be dazzling hot during the day, it can get extremely cold at night, so be sure to take some extra clothes with you for the night!
It is extremely cheap in Iran. With the equivalent of 1€ you can eat good (at cheap places, not fancy restaurants) for the whole day. A five star restaurant on the top of a skyscraper in Tehran won´t cost you more than 5€...guaranteed!!
You will also be invited nearly anywhere to eat for free by whoever..
Wi-fi is really not much spread but you will find many cheap internet cafes, which sometimes will also insist in inviting you and not letting you pay. Some parks have free wifi, see Accommodation.
Not probably a good idea.. At least in the western style and vision of it.
The currency first of all is that cheap that an average good iranian working day pays around a low/average european working hour, which can mean, a good european busking 15minutes..having this in mind is not really comfortable saying you have no money..
It is not clear whether busking is forbidden or allowed by law, but for sure it is not something very common and might easily call unwanted attentions.
You won't probably have much troubles with police being a foreigner, though could be better avoid it.
Better keep your music, juggling or any street gift for the dozens of kind host who will invite you.
- Your passport should not contain evidence of a visit to Israel.
late 2016: I got an invitation code within a week from key2persia, since I don't use Paypal they just offered me to pay afterward, once in Iran. In the application I left fields for airport and flight number blank and my travel schedule was only for the first week, without naming any hotels and still it worked.
Visa on arrival
Iran has a visa-on-arrival program for several countries, but only when arriving in an airport. Ask your favorite search engine and don't forget to leave your experience here. ;-)
Coming overland from anywhere else you'll need to get the visa beforehand in one of the iranian consulates (Ankara, Erzurum, Istanbul, Tbilisi, ...). Without MFA code/ invitation letter you'll be rejected however. Agencies like caravanistan.com or key2persia.com do this for you, costs about 30-40$ and takes a week or two. Or go to Batumi. You don't need any authorisation codes, and you get your passport back, with visa, in one hour. cost was 75 € for 30 days.
"Sadly, I had to fly into Iran. I did not manage to get a visa in Yemen or in the United Arab Emirates beforehand (I stayed 7 days in Muscat until the embassies opened again; they told me at the Embassy of Iran that they can only issue for residents in contrast to what I have been told before). Flying into Iran is an option for people from some privileged countries. Larger airports in Iran can issue a 14 days transit visa on the spot. However, I guess this is not an issue as most people here will travel the other direction and will only start their journey when they have this visa (since this is the only visa Germans can not get at the border)."
Update July 2017: It seems that it is not possible to get VOA for Iran on Meghri border anymore. We tried that today and were refused. Soldiers at the Iranian side said it is impossible and we should get back to Yerevan and apply for it there.
At least europeans get visa on arrival if coming from Armenia. Border towns are Meghri and Nordooz. Border's open 24/7, but visa office closed on weekend (friday and thursday) and at night time, maybe they let you wait/ sleep in the customs building, there's a toilet and little shop. It may be closed at other times too. Works without invitation letter/ tourist agency code! As of late 2016 prices are 75€ for single entry and 90€ for double entry, which leaves you with two times the full 30 days! In between take one of the ferries across the Persian Gulf ;-)
If you want to apply for the visa in Turkey, as many people do, on the silk road, there are consulates in Ankara, Istanbul and Erzurum. But according to many people who have done that, it can be a huge loss of time, waiting weeks, and sometimes being refused (even if you have already paid!).
NOTE: The Trabzon fun is over! The MFA code/invitation letter is needed there as well now.
As of March 2015, this information is probably not up-to-date anymore: There is an Iranian consulate in Trabzon, north-east of Turkey, where it's possible to get a visa without any problems (nor much questions), usually within the same working day, sometimes 3 hours, sometimes 3 days according to the mood of employees. It works for most of EU passport holders: French, Belgian, German, Italian and most probably plenty of others.
The particularity of this consulate is that, contrary to the usual formal procedure they do not require the code normally necessary at iranian visa. They ONLY want 2 photos, 60€ (in 2012 were 75, 50 plus 25 of express procedure), 2 forms to be filled in and... That is ALL. (No application number, no letter of recommendation, no hotel reservation...)
If they ask for your itinerary, you can sketch an approximate route between the biggest cities, Tabriz, Tehran, etc. If they ask you how you will travel, just tell you go in those city then take a plane back or to the next country you already have a visa.
See Visa Policy of Iran at Wikipedia.