In a nutshell, if you're "upgrade eligible" (log into your AT&T account to see if you are), you'll be able to buy the new iPhone for the discounted price of $199 for the 8GB version or $299 for the 16GB model. (AT&T is somewhat vague about the eligibility criteria, although your credit history and the time remaining on your contract are factors.) You'll also have to pay an $18 "upgrade fee."
If you're not eligible for the discount, you'll have to fork over extra for an "early upgrade"-$399 for the 8GB iPhone 3G or $499 for the 16GB model. Ouch.
AT&T also says that a "no-commitment" (read: no contract) iPhone 3G will be available soon, at $599 for the 8GB version and or $699 for the 16GB handset. Pricey, but hey-no two-year contract.
All this was quoted from yahoo news read more from this link
iPhone 3G on sale 8 a.m. July 11; no-contract iPhone on tap (
iPhone 3G on sale 8 a.m. July 11; no-contract iPhone on tap : Ben Patterson : Yahoo! Tech )