This is largely just a trick of marketing, if you look at the cost of the phone over it's lifetime it turns out much cheaper to buy up front, My n1 cost me 600 AUD, I then bought a 129 AUD 12gb 12 month SIM card and a VOIP account for 3$ a month for an incoming local call number in the current capital city I'm located in, which will be changed next time I relocate at the end of the year.

Total cost over 12 month period will almost definitely be less than 1k unless I go completely overboard on voip calls, to boot the voip calls are far cheaper than normal mobile operator calls, and work fine over 3g with the sipdroid client.