1) Does anyone know where to get GSM IP Cores and/or DSP software
for free? If this fails, then cheap or even expensive?
2) Also, I'd like to know what are the basic steps needed to build a
small GSM device capable of communicating with a GSM phone.
How hard is it? Can it be done as a hobby and/or as a masters thesis
at a univiersity? Or is it more like a Ph.D. thesis?
My impression is that this is a very large project, even if you only look at the baseband processing of the receiver/transmitter. The baseband part would most likely be implemented in a DSP with HW accelerators (in FPGA/ASIC) for viterbi equalization and viterbi decoding etc.
Also you need to consider the radio part, with high requirements on linearity etc.
Another large part is the RLC/MAC and the RRC protocol, which is probably implemented in a general purpose processor.
You can have a look at the specifications at www.etsi.org (or www.3gpp.org).