For non-qualified customers, including existing AT&T customers who want to upgrade from another phone or replace an iPhone 3G, the price with a new two-year agreement is $499 (8GB), $599 (16GB), or $699 (32GB).
Apple - iPhone - Compare iPhone 3G S and iPhone 3G
Enjoy the truth.
(via allisonweiss)
That’s not exactly the truth though. As John pointed out to me, that’s only for non-qualified customers, which means you have really shitty credit and can’t qualify. Customers in good standing that can qualify get the phone for $299 (8GB), $399 (16GB) and $499 (32GB) as proved by this screen shot he took when trying to upgrade on the Apple site.