Hence the summary should read "Why is the US so backwards?". To which the answer is: "because people pay more this way".
Two-year contracts become less and less popular In Germany. There are people, of course, who want a new phone every two years and are ready to basically lease the hardware, but the prepaid options are getting more and more lucrative with an added bonus of being able to cancel the service at will.
If you want you can buy a dumbphone for 20 euros, get a prepaid card for free (some vendors even offer initial bonus) and give it a go.
Same with smartphones, I got my Nexus 4 directly from google and use prepaid with it. There is a vendor now who offers advertisement-paid mobile flatrate: you have to agree to receive an advertisement a day via SMS and the speed is cut to EDGE-level after the first 100Mb, but for me it is an ideal offer as I seldom call or send an SMS but use online messaging from time to time.