This is a very valid point, and doesn't take into consideration that you may be inclined to buy accessories. After a couple of bluetooth headsets and cases you'll be pushing $5000 for two years. That is a lot of money, regardless of who you are.
Now, some of this isn't unique to the iPhone. In general, the cost of ownership of "smart phones" is much higher than a normal, free (or almost free) cell phone and a basic rate plan. What IS unique is that the iPhone is appealing to a new market- a market that previously, at best, owned a Motorola RAZR. Most of the folks you see using Blackberry type devices are business people who are already used to paying a lot of money for cell phone capability. In some cases their companies pay for the plan, or in other cases these folks mentally write it off as a necessary career expense that they have to pay for.
So, over the last few years, people got used to paying $300 for an iPod. I suspect that this was a new thing for Joe Consumer... in the past he may have never considered paying $300 for such a device. The prior benchmarks were things like cassette walkmans and portable CD players. So at first glance $500 seems like a large, but potentially achievable jump from the $300 price point. However, as shown, the cost of ownership is actually much higher. Are everyday consumers willing to shell out 5% or more of their income to own and operate a phone?
Personally, I think the iPhone is going to be great. It may take a revision or two to get to that point, but it really does have potential. I don't think the pricing issues are unique to the iPhone. It is an issue with the cost of ownership of any "smart phone." Even basic cell phone plans haven't really gotten much cheaper over the years. The only thing that helps me justify the cost of a family plan is the fact that we booted our home phone service and as a result save a reasonable amount of money each month on that.
