After reading this thread, it seems the main reason people want an iPhone (or other smart phone) and pay the ridiculously high monthly fee is because: people find the convenience of the data plan, and the features of the iPhone worth it.
I pay £25 ($40) per month for my iPhone plan and don't feel that it's "ridiculously high".
Before I had my first smartphone I was paying around £15 per month, so an extra £10 for all the added benefits I'm getting is a bargain.