Update, 5 April 2006: Mac OS X 10.4.6 includes iSync 2.2, which supports the N70 out of the box, which means that you can happily remove the iSync Agent app, which solves the clash, so you only need to follow the easy three-step process just below.
Excuse the long title, but I've been searching for a way to do this for weeks.
I was using iSync on my phone, which is why I've spent weeks chasing around after this.
The important thing to note is that you can still use iSync, you just need to temporarily disable the iSync Agent when you want to use your phone as a modem.
For a nice sane way to make iSync work with your N70, read this post to get my N70 iSync plugin!
I'd followed those three steps above, which were pretty much what I had done with my 7610, and it didn't work, Vodafone were no help (really astonishingly unhelpful), and no-one else seemed to have an answer. At lunch today I started trying random things to see what happened. I looked at the console logs and realised that the bluetooth modem handshaking wasn't working: the bluetooth connection to the phone was made, but the modem commands were being ignored by the phone. I then realised that the iSync Agent that iSync installs on your Series 60 phone listened for bluetooth connections, and I wondered if that might have anything to do with it.
I disabled the agent, tried the modem connection and it worked flawlessly. So, there you go. The iSync Agent co-existed perfectly peacefully on my 7610, so I imagine that when Apple release official support for iSync and the N70 this problem will just vanish...