It's pretty easy to see that you will be paying more in the long run with the 3G model when compared with the 1st gen iPhone. Minimum $75 a month (excluding taxes and fees) for 24 months is $1800 for service plus $200 for the cheapest handset is $2000 over two years. The old iPhone (for me) is $60 for the service ($1440 for two years) plus $400 for the handset. This is considerably less than it'd be for the new iPhone over two years ($200 less).
So it comes down to: Is the increase in price worth it to have 3G and GPS? That's a subjective question.
On one hand, I think it's quite deceptive and irresponsible for Apple to market it as "half the price" but on the other hand it's the consumer's responsibility to know what they will be paying. You can make your own decision after slicing through the marketing talk. In this respect, Apple is no better than any other cell phone company.
