Here is a comparison of the first generation iPhone's price with the new 3G second generation iPhone's price.
The iPhone is known for many things, but its price may be its most closely watched "feature." When the iPhone debuted last summer, it had a very high price tag for the 4GB and 8GB devices (originally $499 and $599 USD). After a short time, they slashed the prices by $200 dollars, making the new (and current as of this writing) price $299 for the 4GB iPhone and $399 for the 8GB model.
Along with the iPhone, one must purchase a service plan from AT&T. Regular service plans have always been the norm for iPhone customers, but there is an additional data plan required for the iPhone. For consumer users, this data plan is $20 a month extra. It includes unlimited data and 200 text messages. More messages can be purchased for a fee.
Now with the advent of the 3G iPhone everyone is out comparing things. First of all, the basic service plan is the same for both sets of phones, so it is effectively a non-factor. The new hardware will cost $199 for the black 8GB iPhone or $299 for the 16GB iPhone (which comes in black or white).
The data plan is different as well. Not only does it cost $30 dollars instead of $20, but it does not include text messaging. That means texting requires an extra fee. The benefit of the new phone is of course higher data speeds and a more advanced email system (push e-mail). The corporate monthly fee is $45.
Let's do a little math. For an 8GB 1st Gen iPhone, it costs $399 + $20x(12). That comes out to about $639 for the first year of service. On the other hand, a 3G iPhone costs $199 + $30x(12). That's $559. The second year is $120 dollars more for the new phone, so if you have it for the full 2 year contract, it is technically more expensive than the old phone. Remember this too: text messages are extra.
Obviously the 16GB phone is the same as above, but with one hundred dollars tacked on to any price.
Good luck and happy iPhone hunting!