What was the price of the original iPhone and how did it compare to the popular phones of the day?
The original iPhone was $500-$600 + 2yr contract, then later $400 + 2yr contract. This was in an era when almost all phones were tied to 2yr contracts, and were partially subsidized by contract. So, the price felt high at the time because it was both the contract and a high price. (and most people's sense of getting a new phone being "oh, my contract is up, I can get a new phone!")
For comparison, from the 3G to very recently, Apple usually advertised the price of the iPhone as it's subsidized price, so you'd usually see $200 as the starting price for a base-model new phone. But even then, from one standpoint, the iPhone 2G started at $500 + contract, and the 3G started at $200 + contract.