Here's what I did:
Purchased an 8GB iPhone from a local AT&T store with a new contract for $199. Canceled the contract after 1 month, for an addition $180. Paid another $70 for the 1st month's bill. Total = $449.
Then, sold the iPhone on eBay for $749. After eBay fees, paypal fees, and shipping charges I made $700 minus the $449 that I spent buying it, and made a profit of $250.
Then I purchased a factory unlocked iPhone from Australia (where they have the option of doing this for an additional $80AUD with their carrier) for $950. With the profit that I made, I really bought it for $700.
BUT I also used the Microsoft Live Cashback promotion that ebay and microsoft have been doing (anyone can use it, just go to live.com and search for a product) and got back $100.
It was a long and lengthy procedure but in the end I basically got a factory unlocked iphone 3G for $600. Perfect for T-Mobile! (I was obviously pretty desperate for this phone

).