Normal users need good performance too, but the bottom end of the market is always saturated with completely unsuitable crap. A safe way to look at it is that most users need roughly the power of a 2 year old flagship device. That has been true for many years as well.
It absolutely is getting more correct. I used to update my desktop every year or two. I'm now still on a Core i5 2500 from 2011 and have zero reason to upgrade again, even despite some gaming use.
For phones, it's a bit different because they're back on the part of the performance curve where desktops were years ago and power efficiency is still improving rapidly but I think they're getting close to that crossover point.
The average user can comfortably use a 5 year old pc even today, ofcourse with an SSD upgrade.
For me, I'm planning on getting a Pixel 3a. The talk of it being like a "2 year old flagship" sounds great to me, not a detriment at all. I'm upgrading from a Honor 8, which is an almost 3 year old mid-range phone, so the Pixel 3a will be a decent upgrade, even though the performance of my Honor 8 is still perfectly good. I'm mainly upgrading for the camera, 3 years of software updates and because my Honor 8's Bluetooth is becoming less reliable over time.