Apple is now offering the uber-popular iPhone with and without contract. The good news ends there as the phone will still be locked to the AT&T network. The phones are available for a no-contract, unsubsidized price of $499 (iPhone 3G), $599 and $699 (iPhone 3GS).
What good is a locked, unsubsidized phone? Great question! Maybe it was a deal for all the folks that traveled to the US and took the phone back to their country as a souvenir. Now, many of those countries have iPhones, so that advantage is gone.
Currently, the no-contract phones can only be purchased in Apple retail stores. A quick look at the website shows you cannot purchase then online without a contract. It is not clear why the distinction is made between on and off line purchases.
If buying $500+ phones is your thing, today is your day. For the rest of us, this news is a bit of a sleeper.