Look, you have a point, but what most people find offensive is that they're charging folks an un-subsidized price for a device that further requires a lenghty contract, has very tightly-controlled and therefore somewhat limiting features, lacking some very basic options and on and on..so forth.
I know lots of folks who like their iPhone and tried to convince me to get one, but the downsides far outweigh the upsides for me personally. I can't go without a qwerty keyboard (Sprint 700Wx), period, bluetooth stereo, extended batteries (no matter how much juice a device has, it's always good to get a spare or at least have the option to get one, having to send it your phone plus pay $29 to rent one is retarded), no 3G (Sprint and Verizon are making a killing with their EVDO offerings, no GSM carrier in the States even comes close, especially to Sprint at $15/month)...i could go on, but what's the point.
Sorry, a $500-$600 locked-down GSM phone will not "have a good portion of the cell phone market" like you say. At that price point it doesn't work for everyone or the majority.
Let us all let it be. Some like it and it works for them, others don't and it's not for them, like me.