This is purely speculation. If they wanted a cheap iPhone they could get an iPhone 4 or 3GS, why do people still choose Android?
Because people are still getting "a new phone," not a new phone that happens to be last year's model.
I don't think that really follows well from the claim above. If they wanted an iPhone they could get an iPhone 4. Getting a Bionic or Razr instead is user choice.
Of course, the iPhone 3GS was only available on AT&T, which leaves out all Verizon, Sprint and T-Mobile customers. The iPhone 4 is still $100 for an "old" phone, where they can get a new one for the same $100, or less.
Among my less technical friends, Android and iPhone devices are more or less equal.