There are lots and lots and lots, people like new tech, and if you can easily get a new iPhone every year, then they will. It's been proved already, just look at the Nexus 4, good spec and cheap and it's been selling like nothing else! In fact it's spec almost beats the iPhone 5!
Apple will need to keep the retina display and LTE and a decent camera. It should really inclue NFC as well although it's still not really taken off. But it can do all this at different price level, like use a slower LTE speed chip, use the iPhone 5's camera and give the iPhone 5s or 6 a better one, use a plastic case, use a dual core GPU and CPU A6 at 1ghz with 1 gb ram, give the higher end iPhone 2 gb ram and 1.5ghz with tri core or quad core graphics like it has now, use a 3.5" screen as that will save a lot or use the iPhone 5 screen and give the higher end iPhone a much higher res one.
Their are so many things you can do to produce a lower price model without skimping on specs, and considering how much profit Apple place on their products they have MORE then enough room to do it price wise, they could even charge £350 for a 32GB version and £279 for a 16GB version or something, again give the higher end model 32, 64, 128 storage choices.
I would probably buy a new one every year but $600 plus I can't justify one every year also at the lower price point I wouldn't sign a cell contract. 
