3gs
While I would never want to save $260 ($199 + taxes) on a phone for which I'm gonna spend at least $1,400 over the next two years, I can imagine that for a family with two or three kids who are moving to smartphones for the first time, it's a no-brainer. Mom, dad, 2 kids - about $160 in total (Taxes, at least the way they calculate it in CA), vs. $1000. No brainer for a lot of families.
My question is - could Apple just be using up components they already had, or are these all new purchase orders to their suppliers? We'll never know, but I think it's the latter and my buddy insists it's the former and I wish they would say.