[betterth]

Notice how unlike Android phones, they don't introduce NEW phones at cheap price points? How they use old models for free and cheap models?

This is intentional -- users understand that free and cheap go along with old, and users don't mistake their old/cheap device for the new hotness.

Now, with Android, the effect you're describing happens 100%: People buy brand-new Android phones that are free/cheap and get disappointed "but I thought it was an Android, I thought it was better than iPhone" or something.

I think Apple's maneuver here is deft, because you won't see a 3GS owner claiming they have the new hotness, but you will see them still coveting the new hotness (which is 100% the point).