Apple marked Super Tuesday by unveiling a "new" iPhone. The 16GB model actually is exactly the same as the first generation model, but with double the storage capacity of the original 8GB version. All other specs are the same, and it wouldn't make sense for Apple to suddenly start maintaining two iPhone firmwares - so we've basically got a storage bump and that's about it.
The new 16GB model is listed on Apple's site as shipping in 1-3 business days, and sells for $499. An 8GB model is still available for $399 (no price change). Both models require a two-year activation with AT&T; however, activation is handled by the end-user via Apple's iTunes software, so no rebates or other contract-dependent incentives are involved in the pricing.
Apple also doubled the storage capacity of their iPod Touch personal media player to 32GB - both iPhone and iPod Touch use flash memory chips for onboard storage, and storage bumps for both models have been anticipated by the Mac community for a few months now.
Learn more at the iPhone product page from here.