And those $300 phones don't have a mind-blowing camera, but the latest gen flagships phones finally do. That, plus the fact that phones become obsolete much more slowly now, makes those $1k phones a worthwhile investment to me.
And as the Pixel 3 has shown the software makes far more of a difference to the quality of the photo then the hardware.
Software and hardware dance together on iOS.
Since Apple seems to be failing at that.
Apple and other phone makers set the benchmark years ago, people don't seem too interested in going back. Even when they're buying non-Apple phones, they're buying other companies' flagships: Samsung, LG, Huawei, Xiaomi. Those phones are no slouches either.
The physical focal length of a phone lens is about 3 to 4.5mm. There's not a lot of light-physics you cam do in that much space. Even a cheap point-and-shoot fixed-lens camera will be superior and will cost much less than the phone upgrade increment.