My first cellphone was a Motorola, costing me 750, five years before iPhone, and a palm to handle calendaring, and notes, and a few other functions. Compared to the iPhone today, these are a ripoff, but I and many others coughed up that kind of money.
I certainly would like to see the end of subsidies for all phones, removal of long term contracts, common cell technologies, and concomitant drop in providers' monthly and usage charges to make up the difference. Being realistic, when you buy a subsidized phone, you're really taking out a loan, and paying exorbitant interest. Get the carriers out of the business, or let there be competition in this loan making business, or let those who can, buy the phone outright.
We would all be better off, and I'd doubt there would be much change in purchasing trends. There are no subsidies for the ipad, or other Mac products, so there should be little for the iPhone.