No. It makes sense because the contract includes a subsidy for your phone and they are intertwined.
It makes sense because if you can't afford an extra $100 up front for your phone then you shouldn't be entering into a $2k 2 yr phone contract.
It makes sense because you get something worth $100 more on the back end of your contract while getting to use a better phone.
Again I can see the 5c being a personal choice just not a financial one.
You just spewed a bunch of rationalizations. It's still $100. Comparing it to the cost of the contract is silly. The question is, for each individual user, whether the marginal utility of the extra features and aesthetics is worth $100. For many, the answer will be no.
Also, your logic about "affording" the contract is flawed. Many people live paycheck to paycheck. An extra $100 in lump sum makes a difference to some people. Many are on a budget. Again, just because it isn't a choice you would personally make doesn't mean it's a "wrong" choice for others.
Frankly, the only compelling point you have is resale value. But many people don't resell their phones, or do so promptly. Often they are handed down to kids, friends, etc. And once again, $100 today is worth more than $100 tomorrow. That's a central concept in economics and finance, and in the context of constrained household finances, it's especially true.
Nothing is stopping you from buying a 5S. Apple will be thrilled if you do. Heck, I even think that's part of the point. This is a beautiful example of product differentiation in luxury goods (despite claims to the contrary, this stuff is still nowhere near commodity economics). All I'm saying is that a ton of people will find the 5C attractive. You get the same screen and power as the top-of-the-line from two days ago at half the cost (subsidized), or $100 less unsubsidized. Really, what's to complain about? I don't get it.
EDIT: One thing I'll add that changes the dynamics a bit is AppleCare. I was going to get my dad a 5C, but since he definitely wants AppleCare, that by itself may nudge me to get him a 5S instead. I trust the logic is clear and obvious here, but if not, let me know.