Apple follows AT&T, drops official US iPhone 3GS price to $49
appleinsider.com
appleinsider.com
$49 is still a lot of money for some people but those people generally won't buy smartphones (if $49 is a lot to you than you probably aren't going to be able to pay it monthly for a data plan). So even if free Android phones flood the market I don't see it making much of a difference.
You can't expect prices of old iPhones to stay high permanently.