Seems to be a lot of assumptions that people are outright buying devices for their kids. I'm sure it happens, but I think more often the kids are handed the devices that have been retired. I have friends with older teenagers that may get an iPhone 5c or 5s, because the cost really isn't that much when subsidized with a contract, but if you're talking about younger kids, I don't know anyone who has outright bought 6yo Timmy an iPhone 5s and given it to him unrestricted. I'm sure it happens, but I don't think it happens enough to be in the discussion.
I have 12, 9, and 4 yr olds. All have had ipod touches, iphones with or without the cell enabled, or old iPads at some point or another. My 4yo was given an old iPhone 3G and he played on it until it could no longer install apps because it didn't support the iOS version that his apps used. They all also have their own computers - again, hand-me-downs or freebies (I work in IT so my access to retired equipment is greater than some). We still have an iPad 1 in the house that works just fine, and it's gone through me, my wife, and every child.
Like many have said, it's all about the kid. There's no right answer. My eldest daughter now has an iPhone 4S and it is actually a phone - she's spent over 2 years showing us that she's responsible with the device itself before we upgraded it to "phone" capable. My 9yo girl, OTOH, leaves her iPhone 4 (cell disabled) all over the place. She's not as responsible just yet. She is also using a device that's several years old and has been passed down by quite a few people. It was her sister's before she was given the 4S. They know that if they break it, it's gone.
None of the kids know the purchase account password and so we have to approve everything that's installed. The Apple parental controls are pretty effective. They're not going to get everything, but they work well enough. Growing up as the tech-savvy kid in a world just coming into tech (I'm 35 now, so I was a teenager in the late 90s), I was never restricted. I also found things of my dad's that he wouldn't have wanted me to find. I wouldn't necessarily want my kids to do the same, but that's also... a part of growing up. It's a balance. I can't shield them from everything the world has to offer, but I can certainly try to deflect and limit it.
TV shows are the same way - I cringe whenever I'm watching something with my kids and there's language or content that seems inappropriate, but then I watch something like The Goonies with them, which I watched growing up as a kid, and the kids themselves are cursing and talking about genitals and whatnot. I think as adults we're more sensitive to it than the kids are - the first time I watched Goonies with the kids I had 0 recollection of that content, and I watched that movie *religiously* as a kid.
I know quite a few people who go as far as to home school their kids so they can control every aspect of their kids' external influence. They control who every friend is, everything they watch and listen to. I've watched those kids grow up. They're not well balanced. They parrot their parent's opinions on everything because they're never taught to think for themselves, to make choices for themselves. But that's their choice as parents. I'd not do that to my kids, but if that's what they want to do, then great.
As far as what other people think, who cares. If you see my kids piddling on their iDevices in public or whatever, and you don't like it, too bad. If you want your kids to be completely devoid of technology until they're 18, great... for your kids. My kids are fine, thanks. If you want to judge them, or me, then that's your problem, not mine.
Are they spoiled? I suppose, compared to the impoverished. They also get 3 meals a day and have stable housing, which is more than over half the kids on the planet, so should I feel guilty? I don't see how giving them a device that's no longer used and is several years old is "spoiling" them. I guess I could sell that old iPhone 4 for $100 or so instead of giving it to my middle daughter. Is the $100 worth the entertainment and educational value of the iPhone in her hands, over a matter of 12-24 months? Not in my opinion.
Is it worth $25/mo for my eldest daughter to be able to talk and text, if it means I can get ahold of her when she's at a friend's house or at her grandma's house or whever? Yep. I can, and have, taught her responsibility with usage - phones aren't usually allowed at the dinner table, don't talk or text other people when you're visiting friends and relatives, etc etc etc. If she wasn't able to process and apply the finer points of phone etiquette, she wouldn't have a phone.
My 4yo is an absolute prodigy on iDevices and also plays games on the computer. He loves playing Half-Life 2. Of course plenty of people would, and probably will, freak out over a child playing a FPS. He knows the difference between reality and fantasy, and he's only allowed to play a little while. We play together and it's like virtual tag. The girls, him, and I will all play together and have a blast. We also live on a couple acres of land and he gets plenty of play outside time, and he socializes regularly with other kids, so it's merely one aspect of what he does with his free time.
But I get not everyone is going to agree. So don't let your kids play it. No need for pretentious rage, which is the usual "internet" response. Your way is your way, and it works for you and your kids. My way is my way, and it works for my kids. Neither is right, neither is wrong.