So, over the life of your 2-year contract, this would cost you $335.76. Or, more than the iPhone itself. Even the expensive model. 

Oh, and you’ll still have to pay a deductible if you do lose the thing ($199 for a 32GB iPhone 3GS).

God I hate AT&T — they should really call this option the “subsidy recouper,” because that’s basically what this is.