AT&T has revised their iPhone 3G S upgrade policy beginning June 18, 2009: Customers who’re eligible for an upgrade, usually after 12-18 months and spend more than $99 a month will need to pay $199 (16GB) or $299 (32GB). Customers who’re not eligible but wish to upgrade their iPhone, following under AT&T's 'Early Upgrade' policy paying $399 (16GB) or $499 (32GB). Customers with no commitment can purchase the iPhone 3GS for $599 (16GB or $699 (32GB).

More info: AT&T Upgrade Policy