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I agree with the others, their first pick didn't work out so now they are offering the job to you. If you want the job be gracious and accept it. Don't ask a lot of questions and make them rethink their offer.
It might be exactly what they said, the budget changed and they did whatever they had to in order to bring you aboard. You were so great that they found some money to add you.
Or, the first choice didn't work out, that happens; maybe he got three job offers in one day.
Or he got arrested, or deported, or drunk. Enjoy your job, sounds like a dynamic situation.
Whats up with this? On the first rejection phone call I asked why and they said my skills were great, I was great but they just "found a better fit." The guy went on to rave about my resume and skills and that he told his colleague from another department about me because he was hiring and looking for someone and that he is already expecting a call from me.
1.5 weeks later I get a phone call from the same guy that rejected me and he mumbles something about "having a new budget in their office" and that they can now, in fact hire me and would like to give me the job.
Whats up with this? Has anyone ever been denied a job and then offered it? Why would they do this? It doesn't make sense, on the first phone call it was a "fit" issue and now it's a "budget" issue?
Yes. It happens. Often you are the 2nd pick and something falls through with the 1st pick.
Moral of the story: Even if you are told you didn't get the job, always be gracious and ask the employer to keep you in mind for future openings.
I was 2nd pick and got a job several months after the interview. 1st pick didn't work out. It happens.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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This is why we don't notify the unsuccessful candidates until after the new person actually shows up the first day. Often a great applicant has several offers pending and may back out after a better one comes along. Coming in 2nd when there may be 100 applicants is no disgrace. You ran into some luck, take advantage of it.
Whats up with this? On the first rejection phone call I asked why and they said my skills were great, I was great but they just "found a better fit." The guy went on to rave about my resume and skills and that he told his colleague from another department about me because he was hiring and looking for someone and that he is already expecting a call from me.
1.5 weeks later I get a phone call from the same guy that rejected me and he mumbles something about "having a new budget in their office" and that they can now, in fact hire me and would like to give me the job.
Whats up with this? Has anyone ever been denied a job and then offered it? Why would they do this? It doesn't make sense, on the first phone call it was a "fit" issue and now it's a "budget" issue?
I'm still waiting for the negative things they said in the rejection. If you lose the job because they don't like you, they don't spend time passing your resume around and trying to find a slot for you elsewhere in the firm.
It sounds like they would have hired you if they could justify another spot. Now they can. Why not take them at face value? That could well be how it played out. My wife got a career-defining job that way. If she would have been all "You didn't hire me for Job Y, so $@%# you!", she never would have been given Job X, which turned into Job X+, then Job Y, Job Y++, Job Y^2, etc. over the course of only a few years.
Don't look at it as them settling for second-best, look at it as you being so impressive that they had to dig deep and create an extra position specifically for you, just to make sure they didn't lose your talents.
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In case you ARE the "pinch-hitter", don't spend a minute thinking about that. I once landed a job where, due to the several week gap between interview and offer, as well as cryptic phone calls with non-offers, "just making sure I was still interested", it was pretty clear that I was the 3rd or 4th backup. (I was a local candidate, and they were trying to reel in better-qualified relos. Problem was, the job didn't pay enough to justify relocating.) Ya know what? Who cares? Once the job is yours, none of that matters. I had the job I wanted, and those other guys were completely forgotten.
Whats up with this? On the first rejection phone call I asked why and they said my skills were great, I was great but they just "found a better fit." The guy went on to rave about my resume and skills and that he told his colleague from another department about me because he was hiring and looking for someone and that he is already expecting a call from me.
1.5 weeks later I get a phone call from the same guy that rejected me and he mumbles something about "having a new budget in their office" and that they can now, in fact hire me and would like to give me the job.
Whats up with this? Has anyone ever been denied a job and then offered it? Why would they do this? It doesn't make sense, on the first phone call it was a "fit" issue and now it's a "budget" issue?
Had this happen to me. I wasn't the first choice for the Xerox/contract position until the person they picked lied about their education. I received the offer letter and was informed on when I can get started.
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If you lose the job because they don't like you, they don't spend time passing your resume around and trying to find a slot for you elsewhere in the firm. 
