This is one of those rumors that leaves me scratching my head… The Boy Genius Report has been told by two sources that AT&T is prepping to release an 8GB iPhone 3GS for $99 to replace the current line-up that has an old-model iPhone 3G at $99. The hope, according to the rumor, is that this will draw some attention to the Droid Mania that is sweeping the world (okay, over-statement), and keep sales of iPhones up over the holidays.

Personally I just don’t get it. No, it isn’t that I don’t get why AT&T and Apple would do this. That makes perfect sense and might be a winning strategy. What I don’t get is…

The whole $99 iPhone thing. The monthly cost of an iPhone is pretty steep. You need a phone plan plus a $30 “unlimited” (except where AT&T limits it) plan. And if you send a lot of text messages you need that too. It adds up. The thing is, the cost of the iPhone is the same per month regardless of whether it is a 3G or a 3GS and regardless of the capacity. Considering the fact that getting a subsidized iPhone OF ANY CAPACITY requires you to sign a two-year contract, the actual cost of the phone is negligible. The real cost is in the monthly. So to pay a bit less (literally pennies when spread over the two-year contract) to get far less makes little sense to me.

On the other hand, if an 8GB iPhone 3GS DOES appear, at least the only remaining difference would be capacity. That would close the gap significantly but then again, if you are going to use the camera, load any significant apps and take video I suspect you will find that 8GB filling up awfully fast.