A recently leaked internal memo from AT&T, intended to educate employees of AT&T stores about the iPhone revealed that "no subsidies are being offered on the phone at this time," which is largely expected, save for a few rumors.
Apple execs also promised that they will "surprise and delight" Apple TV and iPhone users by offering free applications and features via regular software updates. This is not unlike what we've seen with the iPod, which has had new features (fast scrolling, games) introduced via software updates. Article & Article