There's not much that's surprising here -- new customers and those eligible for an upgrade will be able to nab the phone for $199 (8GB) or $299 (16GB), while "early upgraders" will have to fork over $399 or $499, all with a two year contract and $18 upgrade fee, of course. The telco says a no-commitment version of the phone will be available for $599 and $699, though it looks like that will come after the initial launch.
Yes, the iPhone 3G will cost you $160 more than the original iPhone over two years. If you don't need 3G at all (or GPS), you might not need to upgrade if you've got an old one. Otherwise, $160 is a small price to pay—for us at least—over the course of two years to drastically increase your email and browsing speeds.
Enjoy the new iPhone guys! I like it quite a bit - but will pass again. I just don't want to use AT&T and not be able to type.