Okay, so you would buy an iPhone at $99 and then pay almost that much every month and you'd be cool with that?
If I felt I was getting the same service with the 3G as the 3GS and with a $100 less initial value, absolutely
I have used the 3GS for a few days now and it is a solid upgrade but in the end, it really isn't a huge upgrade for people like me. The internet is a bit faster and the space is bigger, two things I am happy with. But, I know many who would be just fine with 16 gigs and just fine with the 3G internet. Their life doesn't end if the Wifi takes a few seconds longer or 3G takes a few seconds longer. So, spending $100 less at first along with the usual bill is in fact a good thing.
The 3GS for some people is not a huge step forward. For other, it is.