I've tried checking eBay but their new interface is hard to understand
And craigslist is full of highballers so that's not an accurate representation of what people purchase used iPhone 4 16GB for.
I sold a black iphone 4 32gb in near mint (no scratches etc.) for $400 in Orange County, CA about 3 weeks ago. Updated to 5.0.1 and not jb/unlocked.
You got a good deal and that buyer didn't do his homework.
16 gb in great condition would sell for 250-275 easily. 32 gb would be around 300-350.
You do realize that just because people are posting it for $500 doesn't mean they are actually being sold?