I for one am happy. I've got no 3G in my area so the extra $10 a month is not worth it. If they start offering the 1st Gen iphone for a comparable price to the 2nd Gen I might pull the trigger on that purchase.
You can get near the same benefit by doing a simple little equation (although it requires a bit of effort on your part).
Buy a really awesome phone that's on sale with an AT&T 2-year contract subsidy (upgrade). Then upgrade to the iPhone 2G (if you can find one); note that you can simply sign a new 2-year contract (that replaces your new contract that you just used).
The beauty of this is that with a phone subsidy and an on sale phone, you can pay $0 for the upgrade, but be able to sell that phone on craigslist for at least $150 (netting your iPhone 2G cost at $250). You might be wondering what the phone aftermarket is like; it's actually pretty good. People lose/get their phones stolen all the time and need to pay aftermarket price. Your $200 new phone would be the only option outside of a very cheapo phone (since they can't renew their contract normally in the middle of it).
I did this when I got my first iPhone:
Wait for price drop. Buy the closeout stock of 4GB iPhone for $300. Since I had just renewed my contract and got a pretty sweet Sony Ericcson phone on sale, I was able to sell it for $160 on Craigslist. My 4GB iPhone cost me $140 (plus the $20 per mo).
Note: When you do buy your "good deal" phone with a subsidy, don't go to AT&T directly; use a reseller like wirefly.com that has much better deals (better free phones that will earn a higher sell price).
Finally, note that if you were worried about the $20 per month for Edge going up, you shouldn't be, because you are under contract. They usually don't/can't increase your rate when you are in a contract (or the contract is void).
As well, if they did do that, you could just unlock the phone, go to T-Mobile (no longer under contract) and pay they're $5 per month data plan which will work for the iPhone (oh no!).
