The Nexus One was, indeed, a failed experiment, but it was a powerful phone for its day (indeed, it seems strange to use that sort of language for a phone that's only seven months or so old). It's still powerful, in fact.
No more subsidies, however. Originally one could buy one and sign up for a two-year T-Mobile contract, and get a subsidy, but now it's just $529 (and a one-time fee of $25 for a developer account), no contract. It appears, as well, they are only selling the version that's compatible with T-Mobile's 3G frequencies (900/1700/2100 MHz).
The devices will ship with Android 2.1, but will prompt a user to install 2.2 soon after being turned on.