Hi. Had to chime in because my DH and I both have IPhones. He has the 1st gen and I have the newer 3G. The new, cheaper IPhone is coming out this year, I think, and it will be about $99. Great price, right? Problem with that is, it is like the 1st gen IPhone, meaning it will NOT be on the faster 3G network and will have only an 8gb memory. My DH complains about his lack of memory constantly and will get the OTHER new Iphone coming out. That one will have a ton of memory and will cost $299, I believe.
Mine, I feel, is the best if you can get, say, a refurb for less than a new one. It has lots of memory and I really love the 3G network. Fast web, faster phone, etc. The cheaper IPhone is good for those who just want an IPhone as a toy/phone. If you have lots of music to store then go for the 3G. My DH loves tunes and his memory is almost eaten up by music alone. You'd be suprised how quickly it is used up.
If money is not an issue and you simply cannot wait for the newest version, then go on and get the current 3G. But if you plan on storing lots of movies and tv shows, PLUS music and you can wait a little while then you should definitely buy the newest IPhone. Call and Apple store directly. They will give you details as to release dates and how to get your hands on the newest IPhone quickly.
Btw, IPhones really are the greatest phone out there. The only knock on At&T is the dropped calls once in a while. I rarely ever have a dropped call, but I have heard others complain about that.
Hope that helps!