I found this latest contract-free iPod pricing rumor over at TechnoJunkie. The poster there writes that he (or she) popped into a Cingular store the other day and chatted up some employees about the iPhone. The employees offered that non-Contract iPhones would sell for $899 (4 GB) and $999 (8 GB) compared to the expected $499 and $599 prices with 2 year contracts.
I find this hard to believe. Would a couple of bored Cingular store employees have the inside info about pricing and conditions so long before the actual product would go on sale? Probably just guessing and wasting time before the store got ready to close.