How's about an 8GB iPhone 3G for $99 on a new 2-year AT&T contract? That's exactly what was just announced at WWDC 2009, and yes, this new price is effective today. We're guessing any remaining 16GB iPhone 3G units will be scrounged up at closeout rates as well. Oh, and if you're mid-contract on AT&T, you'll be asked to shell out a whopping $299 for one of these 8GB units or $399 / $499 for the 16GB / 32GB iPhone 3G S. Frankly, that upgrade deal reeks compared to the offer that was passed along to those who upgraded from the iPhone to iPhone 3G , but then again, the original iPhone was only sold in unsubsidized form.

picture-15Alongside its unveiling of the new iPhone today at the WWDC keynote in San Francisco, Apple also unveiled a secret weapon in its quest to dominate the smartphone market: A cheaper iPhone.

This new iPhone will be the iPhone 3G. While the newly released iPhone 3G S will offer more storage, and presumably a faster processor, more RAM and faster download speeds, this iPhone will have the same specs as the last one. But what you get for this is one hell of a price: $99.

This undercuts the price of the current iPhone models by $100 and more importantly, also undercuts the cost of the Palm Pre by that amount (and even more without the Pre’s $100 mail-in rebate). $99 is a very nice sweet spot for a device that remember, will also have a access to the App Store’s over 50,000 apps.

This $99 iPhone will be on sale starting today.