You can buy it for $99 and never activate it, but it will just be a paperweight. The reason you can get one for $99 is that AT&T is footing the rest of the bill because you're agreeing to a 2-year service contract with them.
Once the current 3G owners have been in their contract for 16 months, couldn't they get either another 3G for $99 or a 3GS for $199 and then resell it/use it as an iTouch?