So many people are so caught up on how the Upgrade Program is costlier than buying a new phone each year and selling the old one on sites like eBay. For me, that misses the point. The phone I want costs about $900 (including tax). Apple is charging me about $500 to use it for a year. If I were to go the route of selling my old phone every year, I doubt I'd clear more than $500 after fees and what not. Not saying you can't do better, but I feel $500 is on average a generous estimate for a 1 year old used phone. So that means it cost me $400 for the year for the phone, which is $100 less. So in essence, I'm paying approximately $100 extra per year to use Apple's program (using generous estimates on phone resale value).
So, what do I get for my extra $100? First, AppleCare. That's nice to have and to know that breaking my phone won't mean I need to pay full price for another, or an exuberant repair fee. Second, I get convenience. I don't have to go through the process every year of selling my phone. The process from creating the initial listing to getting feedback is often several weeks. And I often find it hard to coordinate selling my old phone with getting the new one, with the goal being to avoid being without a phone. The best time to sell your phone to maximize profit is before the keynote and everyone begins selling phones, but you often have to wait several weeks to sell until the new phone is out. Third, you get a safe reliable way to upgrade every single year. There's zero hassle. When the new phone comes out, I simply go into an Apple Store and get it. Plain and simple.
For me, if all of that only costs me $100 a year extra, it's 100% worth it. Of course it's more expensive. But it has advantages. And I think the gap in price will only narrow as this slowly chips away at iPhone resale value, which won't remain this high forever. The $100 difference (max) is worth it to me for what I get. I know some will say that we all can't be so free with our money - and to that I would say, if that amount of extra money is too much for you, then maybe you should be spending your money on things other than a new cell phone every year. For some people, there are intangible things that matter outside of the raw dollars that it costs.