I have actually bought four iPhones on Craigslist. 2 Originial iphone three years ago and then 3G's for me and the wife over the past year and a half. Only felt sketchy once when the guys gave me a wierd vibe. I guess I am a little on the lucky side, but the prices on craigslist are much cheaper than that of eBay.
What kind of phone are you looking for? I have a 3G and a original iPhone that are not being used and could let one of them go. Shoot me a PM if you want them.