According to iPhone Hacks, Best Buy is now offering the iPhone 3G for either $189 (8GB) or $289 (16GB).
Still, the absolute cheapest place to buy a retail iPhone 3G is at AT&T. It is now selling refurbished iPhone 3Gs for $99 (8GB) or $199 (16GB). However, these are used and may have minor scratches and abrasions. From what I have heard though, the refurbished iPhones are very good.
UPDATE 1: The Boy Genius Report says AT&T is offering refurbished iPhone 3Gs for $49 (8GB) and $149 (16GB) until tomorrow (12/31)!
UPDATE 2: BGR says its source corrected the story - refurbs going for $99 and $199 as originally stated.