Facebook today announced an IPO price range between $28 and $35. Given the 22,999,412 shares, Instagram will be valued at anywhere between $943,983,536 and $1,104,979,420. In other words, that's an extra 10 percent added to the previous estimate of $1 billion.
Facebook is expecting to close the Instagram acquisition this quarter, meaning that even after Facebook goes public, the value of Instagram will not be finalized. It will still be $300 million plus whatever the shares are worth at the end of June.
In less than two months, we'll finally know how much Menlo Park values the mobile photo app for Android and iOS. Regardless of what that ends up being, I think the general consensus will be that it's a huge amount of money.