For me, in the UK, the iPhone contract is minimum £35/m - way too much for me. I can get enough minutes and texts (300/300) for £10/m with 30 day notice to cancel. To run that £10/m SIM I need it unlocked firstly. Then I think of extra features to sway me to pay an extra £25/m to go official - for my needs, I don't see them.
I have no real need for 3G and already have a GPS in the car plus with a total lack of camera improvement (autofocus, flash or 3.2mp perhaps) I'm staying with my 1st gen.
I love the current 3rd party apps like weDict, iChinese, iCosta, fring, Books, sketches, etc, etc. and the all-round ease of use of the phone is great... yes I prefer the metal back but I realise they went plastic to reduce cost.
I realise I miss free EDGE currently on a non-02 SIM but I am fine with WiFi at home, work, friends, plus the non-techies who leave their connections unsecured
For me a £25/m increase for little extra use is not justifiable. That said, if I was a heavy data user, I'd upgrade and go official. If I was thinking of getting one but thought it too expensive, it's not any more.
Good luck to all new purchasers - it's a great phone that just got better.