This is painful news for all the Canadian iPhone owners. Canadian users cannot buy iPhone/iPod Touch apps or games using any means other than a credit card! This has even been clearly mentioned in the Terms of Service of the country. Check it out:
US Store Terms:
10. PAYMENT METHODS. The Service accepts credit cards, payment through your PayPal account, and iTunes Cards, iTunes Store Gift Certificates, and Allowance Account balances as forms of payment.
10. PAYMENT METHODS. The Service accepts credit cards as the form of payment.
Due to tax laws and commerce restrictions for software in Canada, customers residing in Canada may only purchase games and applications using a credit card.