AT&T just confirmed the rumor that they're going to be selling $600 and $700 iPhones (8GB and 16GB) that are contract-free starting next Thursday.

The bad part is that you're still locked into AT&T unless you jailbreak and SIM-unlock your phone, but if you're paying an extra $400 upfront for these (which is also another "bad part" of this deal), that's likely what you were going to do anyway. [Yahoo]