iPhone Games

I mean the i-Pod touch has everything an i-Phone has, and someone could just get like the ENV2 and its still good for calling. Why do people waste so much money on that?

I see a lot of people on eBay selling unlocked and jailbroken iPhones for 650+. I know how to do the unlocking/jailbreaking part, but wonder how people buy the iPhone 3Gs without a contract to resell. Anyone know? I want to tap the market.