Can you buy a new iPhone for $40? No, but you can get your hands on a clone made by CECT.
Holding this up beside my iPhone 3G, it is seriously difficult to tell the two devices apart. The back panel of the mysterious phone very clearly labels it as a 32Gb iPhone, complete with Apple logo. My contact claimed to have bought this “down the pub for £25? in an iPhone 3GS Apple box, and I would say that the exterior case is a millimetre perfect copy, with three basic distinguishing areas: the headphone socket, the power button, and the mute slider. It was the mute slider that convinced me of the phone’s “knock-off” status.
A knockoff it might be, but it's not necessarily a good knockoff:
It has dual SIM handling, too, and came with a bizarre auxiliary battery festooned with warnings about not pressing a button mounted on the front of the top-up device.
Personally, I love the IE icon on the touchscreen:
Unlike a genuine iPhone, the SciPhone has dual SIM capability and a user-replaceable battery.
Just in case anyone is wondering, no, I'm not recommending anyone go out and buy one of these FrankeniPhones!