No, you won't be able to use AT&T prepaid cards, which is a pity. I'd rather enter a card number onto my iPad when sitting at an airport, for example, than my personal credit card information (thank you, AT&T, not), and you have to sign up for recurring plans (see the screenshot), but it looks like it's going to be a way better and friendlier experience than my 611 nightmares.
One of the great things about the 250 MB limited plan is that you'll be warned about how much of your data you've used. Apple's writeup states, "[iPad] will even let you know when you're running out [of data]. You'll get three alerts as you near your 250MB limit -- at 20 percent, 10 percent, and zero." At that time, you can add more data (in 250 MB increments) or upgrade to "unlimited" (likely capped at 5GB) for the forseeable future. There is no option for "oops, I underestimated my needs, can I just pay the remaining difference and hop onto the unlimited plan just for this month," so keep that in mind as well.
There's a big old "Cancel Plan" button that you can tap at any time that will get you out of any further purchases. Being a pre-paid AT&T plan, there's pretty much a zero percent chance that you'll get any refunds on unused services, so watch your calendar carefully while living in auto-renew-land.
As TUAW reader DJFriar points out, the service change takes effect when your current plan runs out of data or reaches its normal expiration date, i.e. it follows AT&T's norm for prepaid feature plans. See the Plan Options wording on this graphic from Apple's website.
Apple's write-up indicates that your device can automatically take advantage of Wi-Fi connections when they are available, in places like Starbucks and Barnes & Noble, which offer free Wi-Fi for anyone who has signed up for an AT&T data plan. That's going to be another way to stretch your data if you opt for the 250MB plan.