Nokia loves to tempt U.S. folks with hot 3G N-Series phones that only work in Europe, before releasing a U.S. version several months later like they did with the N95. But according to FCC clearances, it looks like a version of the forthcoming N85 slider (N96's little cousin that isn't $1,200) with full tri-band WCDMA support is going to hit North America, which means AT&T users are in luck. Sorry T-Mobile folks still waiting for the rollout-looks like no 1700MHz support. [Unwiredview]
If for once you would want to be fair and compare fairly then lets not say "1200 USD for the Nokia" yet you quote "199 USD" as the price for the iPhone. Lets instead pick the subsidized prices for some typical carrier that has both and subsidizes both. Unfortunately since the N96 isn't for sale yet there are no price points to compare, so lets use the N95 8GB as a proxy. The pricing will most likely be quite close:
Telia in Sweden sells the N95 8GB for 995 SEK (Swedish crowns), which is 164 USD. The iPhone is 199 USD in the USA, and for Telia in Sweden the cheapest you can get it for is 1695 SEK (the smaller 8GB model, 2 year contract, crappy contract with just 100MB data per month). 1695 SEK is 280 USD.
If you want to talk un-subsidized price then you can get an N95 8GB at Amazon UK for 262 UK pounds - that's 331 EUR or 509 USD. An un-subsidized iPhone runs at a bit over 500 EUR in Italy, the only place that I know you can currently buy them without a carrier contract.