K..
I will never have a contract phone again. Sure, you may get a "free" phone with contract phones, but you have no flexibility... you are stuck with that phone and that carrier for 2 years and WAY higher rates than you would have with a prepaid phone. You end up paying for the phone through higher rates.
I got my touch screen Smartphone, an LG Optimus, for about 60.00 bucks during a holiday sale on Virgin's website, and I pay $45.00 a month for 1200 minutes & unlimited text & data. To me, you really can't beat this. I was easily paying T-Mobile 80-90 bucks a month for almost the same phone & plan.
I am not interested in having the "latest & greatest", so I will never have to shell out a large amount for a new phone, plus, I think it's frivolous to get rid of a phone for no reason, anyway.
Oh, and you don't have to buy the phone from the pre-paid carrier. Sellers offer brand new pre-paid phones on Ebay and all you have to do is activate it when you get it.