Apple is now selling the 8GB iPhone 3GS for $49 with a two year AT&T contract.

iPhone 3GS. More to love. Less to pay.
Keep applications open in the background. Organize your apps with folders. Shop for books in the iBookstore. The 8GB iPhone 3GS takes advantage of all the great features of iOS 4. And it starts at an amazing new price — just $49.

Click here to read the AT&T announcement.