That's correct. The 16GB is $599 if purchased without a plan. From the iPhone page at the Apple Store site:
Requires new two-year AT&T wireless service contract, sold separately to qualified customers; credit check required; must be 18 or older. Existing AT&T customers who want to upgrade from another phone or replace an iPhone 3G or iPhone 3GS should check with AT&T or use www.apple.com/iphone/buy
. For those who are not eligible for an early upgrade or who wish to buy iPhone as a gift, the prices are $499 (8GB), $599 (16GB), or $699 (32GB). In CA, MA, and RI, sales tax is collected on the unbundled price of iPhone.
Serendipity is a lucky guess !