Apple has the factories, they have to keep making the parts, and the phones for replacement, they have already marketed that phone, and its life is somewhat limited. If people are still willing to pay $450 for it, Apple will still sell it. There are so many "free" phones out there that this is a great way to compete in the lower-end market without having to manufacture a different product.
It would look worse for apple to be releasing a brand new phone for free, so they didn't make an 8GB iPhone5c, they did seemingly discontinue iPhone4, which makes sense because there was no lower price point to fill.