We had a hunch this may happen - and the latest Business Week report confirms it has - the first-generation iPhone is become the second-hand market's plat du jour...

We anticipated that on the release of the iPhone 3G the market would initially be saturated with first-gen iPhones, as users got rid of them in order to upgrade.

We also thought that - given unlocking tools and a rich crop of applications are already available for any jailbroken iPhone (1G?) - the second user iPhone would become a cult object, creating its own alternate ecosystem.

The report hints that's what's taking place. eBay prices currently suggest the 16GB iPhone to be worth $600 while the 8GB model is worth a tidy $500 on the second hand market. As TUAW notes, "In other words, the $250 AT&T refurb specials from March are now worth roughly double what you paid for them."

The majority of these iPhones are being shipped out of the US for resale (or perhaps for use in countries such as India in which potential customers are a little reluctant to pay the huge price tag). 

However, there's also strong demand in the US for these devices, the report notes - particularly from users who don't mind sacrificing a few features in order to free themselves from the thrall of being hitched-up to AT&T.

"Whatever the reason, sales of the old iPhone are booming, and plenty of other companies besides NextWorth want in on the resale action. Many are striking trade-in agreements with retail stores like Circuit City (CC) to accept old iPhones on the spot," Business Week notes.