Huh. you're right. I remembered the price drop fiasco-- turns out the entry level 4GB was $499 and the 8GB was $599 at end-of-june 2007 launch, but the price for the 8GB dropped from $599 to $399 when they discontinued the 4GB in September, just over 2 months after both products were released.
https://en.wikipedia.org/wiki/History_of_iPhones#Price_drop_...