I agree, some of these complaints are pathetic. No one is getting bait and switched ripped off. Though I wonder if the $699 is unsubsidized then why do customers have to sign a new 2 year agreement? I thought the whole point of contracts was so the carrier could get back the investment of subsidizing your phone. You can get a iPod touch for $399, so I believe $699 for the phone is probably full retail as you say.
Based on that and the lack of MMS and tethering support out of the gate makes me say AT&T is dropping the ball. Apple should get serious about developers being able to have devices for testing without having to have a bunch of unnecessary monthly phone contracts. I would happily pay full retail to get something unlocked so I can pop in a local SIM card when I travel, but again not an option (there are options, but you can only get an iPhone serviced in the country of purchase according to the warranty, I did read it and decided it wasn't worth the money to import an unlocked phone from elsewhere in the EU). My carrier is more than happy to let me call using Skype on their 3G network, but because AT&T in the US says no I'm prevented from functionality that even some of the free with contract phones have here in Sweden.