You do have one other option available, and it would be the way I would go, but it will require some balls and you really will have to be willing to do what you say.
Call CS once again and explain the story. See what they tell you. I am sure they will just basically blow it off and whatever. You can then ask to speak with a manager and tell them the same thing. If they will not help you out, which they probably won't, tell him nicely that you would therefore like to speak with retentions as you will now be canceling your service. When they connect you to them, explain it to them as well. Tell them that you love AT&T and the service and really like the iPhone. Tell them about how you lost your other phone or whatever the story was, and that you went to the store to speak with the manager and how he duped you into getting a 3GS etc... Be very nice and respectful. Tell them how you would love to stay with AT&T, but as you feel you were really lied to and deceived, that you cannot condone this type of sales behavior by continuing the service.
Then just see what happens. You may end up having to cancel the service in the end, but if you do, so what. Your ETF will still be lower. And you can always sell your current phone for quite a bit. Go away from the evil AT&T and join verizon or something else. Get a cool android phone or whatever.
But it just might work. I have seen retentions do some amazing things in the past (I have gotten some crazy stuff offered to me in the past) and they really do have a lot of power there to try to retain customers.
Good luck.
That's one option, but you risk loosing your number. I'd go the regional manager route first.