For probably 75-80% of your TYPICAL smart phone user, the mid tier devices will be all they would ever need, but, most consumers fall for the slick marketing, hype and got to keep up with the Jones' attitude and will go on the hook (even under an overpriced contract) for a flagship device. I did the numbers when I bought my last phone almost a year ago. I had been off contract for over a year with straight talk, with zero issue or coverage problems.
At the time the S5 had been out and the OnePlus was just out (late May '14). I went ahead and bought a $299.00 Huawei Mate2. It's a mid tier device, 6" screen, 720p, snapdragon 400. It was the BATTERY size that sold me, 4,000mAH.
I ran the numbers between it and the S5, and in a 24 month period (typical USA contract), I save over 84 dollars per month buying outright, than on a contract.
The problem with the device manufacturers now, is lack of INNOVATION. They release a new device every 6-9 months with marginal speed increases or tighter pixel densities, or (shudder) higher megapixel cameras. And with them come HIGHER prices. But, if you run the same apps on my snapdragon 400 device, with these snapdragon 80x devices (general apps, not high intensity games), you will find both devices run them adequately for everyday use. Then why are people willing to shell out year after year for overpriced devices, that the apps can't really benefit from? Because in my opinion, they are suckers. Also, it's in the best interest of both the carriers & manufacturers to NOT offer software updates to the devices, when, they can push them into a new device
every 12 months, and, simply extend the contract. You keep them locked in for life.
I hope these "sell for cost" or mid tier devices flood the markets. It will require the "big boys" to change their market ideas to compete. They will have to drop the price on their devices, or lose market share. More competition is good for the consumer. When the manufacturing cost of a smartphone, with marketing, research, advertising is less than 200 dollars, but yet they will retail them for 700, 800 or more, consumers are being ripped off.
That's why I will stick with a good quality mid tier device. It's your money...do what you want, but I'd prefer value, over bright shiny new flashy things.