A recent rumor is that Apple will start offering the iPhone 3GS as its "low-end" consumer device this Fall with a $350 off-contract price tag. Previously, it was speculated that Apple would introduce a second iPhone 'Nano' model in the coming months for the prepaid and cheaper phone markets.
AT&T has started offering the 8GB iPhone 3GS as a refurb for only $9. Usually, these types of price drops mean that a carrier is trying to get remaining units off the shelves, so we find it unlikely that the 3GS will be of any interest to Apple come this Fall.