That is essentially the Apple-way.  They offer a lot of stuff at an affordable rate which is only affordable so long as you make use of all those features.  OSX is the same way; it offers a lot of features for its pricetag.

The catch is that the value of these items is not the same for everyone.  A person who doesn't need 85% of the services is not getting as much for their money as someone who needs all 100% of what is offered. 

So while you can argue it has a lot of inherent value, until you can prove that every single feature is essential to every single owner, you cannot definitively say it's the best plan.

Man, why do you want wearing a hard-drive in your pocket? As for contract, iPhone + data plan is must for full experience, so I don't see much problem here. If you don't want to use internet-on-go then neither you need iphone.

A lot of you are worried about the high prices of the iPhone. I say instead of looking at the Mac, compare it to the iPod. The original iPod started at $399 in 2001. Then Apple added the iPod mini for $249 in 2004. Then they added the iPod shuffle for $99 in 2005.

And all the while prices dropped. Nowadays, the classic iPod starts at $249, the iPod nano (mini successor) starts at $149, and the iPod shuffle starts at $49.

The iPod nano of today can do much more than the original iPod from 2001 and at $149 vs. $399, it is 60 % cheaper (and no less then 80 % smaller, by the way).

Expect the same thing to happen to the iPhone. In a few years, there will be iPhones for less than $200 that can do everything the original iPhone could do and more.

Your analysis is wrong, mostly because the iPhone isn't comparable to a handheld in the way that it's designed. In order to run something, it needs to run it on top of its OS, meaning that it's more akin to a PC than a console. That OS will take up a good bit of processing power.

Plus, no face buttons and no stylus support = very limited input options.

Yeah, stylus on iphone would be so nice to have. Wait.

From Wikipedia:

"The 3.5 in liquid crystal display (320×480 px at 160 ppi) HVGA touch screen topped with optical-quality, scratch-resistant glass^[41] is specifically created for use with a finger, or multiple fingers for multi-touch sensing. Because the screen is a capacitive touch screen, no stylus is needed, nor can one be used.^[42][13] Bare skin is a requirement; users wearing gloves would have to remove them to use the touchpad,^[43] unless they are wearing electrically conductive gloves.^[44]"

Emphasis mine.

The reason why no stylus support is a problem is because stylii allow for more precise touch commands than fingers do.

And another tidbit from Wikipedia considering touchscreens, bolding by yours truly:

"Capacitive

A capacitive touch screen panel is coated with a material, typically indium tin oxide that conducts a continuous electrical current across the sensor. The sensor therefore exhibits a precisely controlled field of stored electrons in both the horizontal and vertical axes - it achieves capacitance. The human body is also an electrical device which has stored electrons and therefore also exhibits capacitance. When the sensor's 'normal' capacitance field (its reference state) is altered by another capacitance field, i.e., someone's finger, electronic circuits located at each corner of the panel measure the resultant 'distortion' in the sine wave characteristics of the reference field and send the information about the event to the controller for mathematical processing. Capacitive sensors can either be touched with a bare finger or with a conductive device being held by a bare hand. Capacitive touch screens are not affected by outside elements and have high clarity, but their complex signal processing electronics increase their cost."

So, you could use a stylus with iPhone, it just needs to conduct electricity and not ruin the glass surface. 

Wow, that's intriguing. I didn't know that would be possible. Although then the problem with optional peripherals comes into play. You need to make people go out and buy this thing, otherwise there won't be games supporting it. And without games supporting it, nobody will go out and buy that thing. So what you need to jump-start the stylus is either EA or Activision or Apple themselves pushing it.