My mom wants an iPhone. She doesn't need 16GB. I won't let her get a 3G without video recording and the faster processor. So we wait until the mythical 8GB 3GS makes an appearance.
Your move, Apple.
But some people do. It would be silly to exclude them by not offering a 3GS model at the $99 price point.
I would like to point out that if she is going to use video recording then it will use space up, very, very quickly.
Just get the phone.