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See the complete article: Apple fails truth in advertising 101

If you own an iPhone and it requires service for any other hardware failure, Apple will service your iPhone for the Out of Warranty Repair service fee listed below, plus $6.95 for shipping and handling. If you own an iPhone and it requires service as a result of accidental damage, Apple may repair your iPhone for the Accidental Damage Repair fee listed below, plus $6.95 for shipping and handling.
Model Type Out of Warranty Repair Accidental Damage Repair
4GB $199 $199
8GB $199 $249
16GB $249 $299

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Posted in: Everything you want to know about advertising