This is not going to work in my country.
I'm in Brazil. Apple considers it a market important enough to build a factory here. We don't have contracts like the Americans do; we almost always buy phones off contract.
Right now, the cheapest iPhone 4 (not the 4S, the 4) costs R$ 1.099,00, which is more or less US$ 550,00.
The cheapest iPhone 4S costs R$ 1.699,00, or more or less US$ 850,00. The iPhone 5 isn't even being sold in Apple's Online store here, but phone companies sell the cheapest one for R$ 2.399,00, or more or less US$ 1.200,00.
A "cheap" iPhone like the plastic one would not sell for less than US$ 500,00 here. It wouldn't really add much to Apple's current market around here.