Special thanks to those (Petrib and Kiran in particular) for answering my questions. I see to have settled in on a phone and a development platform.
My phone pick is NOKIA 6021. This seems to be the cheapest device which supports Bluetooth. It is an S40 phone but programmable in Java and does support JSR-82. So development platform will be Java.
As fas as bluetooth GPS receivers go there seem to be many choices. I am thinking about one from CellLink, but for no good reason.
My assumption is that the Bluetooth Protocol that is being used to transfer position information will be standard so later on I will be able to use any other GPS receiver as well. Again I will pick to minimize cost.
Only thing I will add, since some have asked, I am not using a used cell phone because I am developing an application for a 3rd world country and hopefully many people will be interested in it -- keeping system costs low is important.
I would welcome any comments or suggestions