So i got my contract back in may of 2008 and of course i want an iphone but i do not want to have to pay 400 and 500 since i would need to upgrade when i am not eligible. So is there any way what so ever for me to get the iphone at the discounted prices in my situation?

I heard if you have an original iphone they will give you the discount prices on the 3G, so could i borrow some ones 1st gen., and activate it on my line and then get the cheap upgrade and give it back to them? or is that not true.

What are my options here? hopefully more than fork out 500 for a 16 gig.....

The only way to be able to pay $199/$299 is to set up a new contract, or add a line.

so basically I am stick paying $500...?

It might be cheaper to actually buy out of your contract than to pay the $500. Check it out, it might only cost you $300 for instance.

But wouldn't it cost me $175 dollar early termination fee? than on top of the $36 dollar activatin fee
so...
300+175+36=516

So as far as i can tell it is best if i just buy it and pay the $500

also is it possible if i buy an iphone and than go back and buy another one? So my friends can get one? Is there a limit to how many you can get per line at a time?

I think there's a limit of 5 per line, so I think you're ok.