AT&T is selling refurbished 8GB iPhones for only $249!
Follow the title link or got to att.com and search for "iphone refurb"
If you don't like AT&T's phone service, TMobile has a great per minute plan. I'll update you on how to use it, 'cause mine's on its way! (It requires modifying the phone somewhat... ;^)
UPDATE: 3/19/08 -- sold out. Probably temporarily, but nonetheless...