I guess iphone 2G will be a good buy at 12k..Trust me, I don't find any use for GPS and 3G in chennai. Moreover 8GB would fillup very fast, 16GB is recommended. Don't worry, jailbreaking is a breeze with blackra1n.
the price for iphone 3g should be around 22000 bcoz its a legit one and warranty is there too.... after April 2010, you can call up Airtel/Voda CC and get it unlocked....