Actually the new phone does cost more. You have to compare the original non-subsidized price to the new non-subsidized price.
The new 'low' price of the iPhone3G is a function of AT&T giving you a 24 month loan to cover the other few hundred dollars of the price.
why do you "have" to? besides, SJ said it's more affordable, not "costs less."
You can't pay $125,000 for a house up front because it's not affordable, but you can pay $125,000 over time for a house because it is affordable. It costs the same, it is simply more affordable.