• A first-generation 8GB iPhone costs $399. Two years of data service at $20 costs $480, for a total of $879 (not including voice service).
• An 8GB 3G iPhone costs $199. Two years of data service at $30 $35 costs $720 $840, for a total of $919 $1039.

In other words, a 3G iPhone will cost you $40 $160 more than a first-generation iPhone over two years. (Over one year, it’s $20 cheaper.) Of course, as a colleague of mine pointed out, when our existing iPhone contracts expire AT&T may jack up the rates on us anyway, so this argument may be moot. On the other hand, if the prices had remained constant the resale value of first-generation iPhones would be much higher and upgrading users would save money that way. In the end, it all comes down to how much faster Internet is worth.

Update: It appears to be even worse. The new $30 data plan doesn’t include SMS text messages. To get the 200 included in the older $20 plan, you pay an additional $5. I’ve revised the numbers above.