TUAW reader Conrad N. tipped us off to a nice 3G iPhone deal this morning. Buy.com is offering an 8GB 3G for just $430 with free shipping. While I wouldn't classify this as a red hot deal (a 3GS would have qualified) it's not bad for anyone who wants to pick up an inexpensive contract-free unit, for generous interpretations of the word "inexpensive".
The 3G model works right out of the box with any AT&T SIM, although AT&T encourages you to sign up for an iPhone-specific plan. If you're only interested in basic phone service without data, you can buy a $10 O2 SIM at Best Buy (it's a re-branded AT&T SIM) good for 3 months of use, at 5 cents a text message and 17 cents per minute of airtime. That's great for developers who want to add a telephony-ready unit into their testing arsenal without signing up for a full contract, who don't want to use the phone except for testing and occasional use.
If you want to use data, however, your best economy bet probably lies in jailbreaking and unlocking (with a tool like blackra1n or pwnage) and using one of T-Mobile's better-priced data plans. But be aware: because T-Mobile uses a different 3G frequency than AT&T, their data plans can only use EDGE service when accessed on the iPhone 3G. Want to use an existing AT&T data-plan enabled SIM? It should work out of the box but AT&T generally disapproves of that approach, and may (ahem) "encourage" you to upgrade to a (contract-enforced) official iPhone plan.
So is the 3G a good iPhone to buy for four-hundred-plus dollars? Recall that the 3G is just a 1st generation system (model 1,2 -- i.e. 1st gen, 2nd iteration) with a few extra bells, whistles, and case design beyond the original model. The 3GS (model 2,1) is a far better system in terms of processor power and features, and we're half a year out from what will likely be the next (model 3,1) iPhone, let alone any (possibly mythical) tablet. I'd call this a "warm deal" at best.