For me it's not the upfront cost of the phone that prevents me from getting it, its the minimum $70/mo in ongoing charges you are forced to buy along with it - ouch!
Well. You can get an 8GB iPhone for €99 up-front here (Austria), but you end up paying almost €1200 over the course of 2 years. (€45/mo; alternatively €149 + €35/mo for 24 mo - just under €1000 total)
Given that you can get hold of unlocked, contract-free iPhones for around €580 (€580! for a phone! and the 16GB model is ~€100 more - though the unlocked ones don't seem to be sanctioned by Apple, so no idea where they dig them up) that works out to being tied to a contract that's somewhere between mediocre and rip-off for €20-25/mo for 2 years and then being stuck with the same network after that. (SIM lock) Oh, have I mentioned that the iPhone is offered by Orange and T-Mobile, the two networks with by far the worst 3G coverage in this country?
The developer version of the HTC G1 at $400 (~€285) looks like a bargain in comparison. I wish I could have a look at one - you can't buy the consumer version in shops here yet, and there's only so much you can tell from a bunch of photos. (size, weight, handling)
