You can buy a Dell Inspiron laptop from Amazon for $300. Or a Sansa MP3 player for 30 bucks. Those are what most people take to be budget models. Apple's product lineup, like any other manufacturer, has a bottom end, but that doesn't mean that viewed from the perspective of the entire market, that bottom end is automatically a budget model.
Exactly. And your original point was that the 5C is a budget model. It's not. They're just offering variety at different price points. I get what you mean about your worries that the brand is putting out something less expensive, but I don't think it will water down the brand. It makes them more competitive, even if they are some of their own competition.