The S cycle clearly results in better phones with more staying power.
----------
The factor that makes me so confident that the S cycle is better is that I have historically bought an older iPhone to travel with. The iPhone 3GS lasted me until this year when I traveled to the World Cup and it was just too slow. Last year, when my old one died, I had the opportunity to buy anything I wanted and I went for a 3GS again instead of a four.
Planning my next trip, and hopefully planning the next phone to keep for another couple years, I have had no doubt that the four ass was the option to go for instead of the five or the four. Better combination of capabilities and price.
With the non-S cycle, people pay a premium for the new design, and I do think that Apple increases the technical capabilities of the phone more with the S models then they do with the non-S models.