The Iphone was originally $499. The price has been dropped to $399. When you buy it, it is only available for Cingular and I believe you have to sign up for Cingular service. Your friend will have to ask in person how much it is without the 2 year package. You can buy already unlocked Iphones for $500 on e-bay. But if you are going to unlock it yourself, might as well buy one legit from Apple for $399.
You could also buy it online and have it shipped directly to you. Although this link in particular requires a 2 year agreement with Cingular. X.x
http://store.apple.com/1-800-MY-APPL.../family/iphone