Apparently one of the phantom sources said that introducing a sub $100 iPhone 3GS is a move to compete with the new Droid smartphone launches.
Apple currently offers 16GB and 32GB versions of the iPhone 3GS priced at $199 and $299, and an 8GB iPhone 3G priced at $99. The iPhone 3G includes a still camera instead of a video camera, doesn’t have a built-in digital compass, and can’t take advantage of the iPhone 3GS Voice Control features.
Replacing the 8GB iPhone 3G with an iPhone 3GS version would make the $99 price point even more attractive to budget conscious smartphone buyers, but so far there isn’t any tangible evidence to support the rumor.