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I'm with piggy on this one - the price of phones is being artificially inflated by the phone operators. Compare the progress in all other fields of electronics with that in mobiles - take PCs for example: X amount today will buy you an excellent machine. In a years time you'll be able to choose whether to buy that same machine for much cheaper, or if you choose to spend X amount again you will get a machine with much higher specs. In the mobile market new models are way slower to hit the market and the difference in the specs you get for the same price does not change as quickly.
I reckon that this is because mobile operators decide on certain models they want to push and then subsidise these (you still get a subsidy when you upgrade, though its smaller than it used to be - which increases the amount the customer pays over what they used to pay) and so want to keep them on the shelf until they get a return on them.
You can't blame them for that I suppose but maybe they should think about making less of a committment to each model, and change the models they push more regularly. This would drive more sales for them as some people would be enticed by the flashy gadget at nice price, and the customer would get products that increase at a rate more like the rest of the electronics industry (e.g. take the astonishing progress in what you get for what you pay in portable MP3 players as an example -this market is not affected by any semi-regulation like that the mobile operators impose on the market).