1. You would need to create a new account, if needed we can help you transfer the files over.
2. That is correct, but you can have as many databases as you want (as opposed to most other companies that limit that number).
3. You would need a domain name to use most of the features of paid hosting (email, stats, fantastico), so we pretty much require that you buy one. We used to sell them, but since we can't price it below cost like some other comapnies are now doing, we are not selling them anymore. Places like godaddy.com and ev1servers.net are selling them for around $7/year... defintly a worth while investment.