Here's the deal. An 8GB iPhone 3G costs $199. Sounds good so far. However, AT&T has added an extra $10 a month to the unlimited 3G monthly fees compared to EDGE, so over the 24 month period of the contract, that sets you back an extra $240.
$199 + $240 = $439
That's a $40 increase compared to the price of the current iPhone.