Ignoring OS, there are other phones that are getting much cheaper. Example is the new Lumia 920 that is $449 on ATT w/o contract. While it is $100 more expensive than the the 16GB Nexus you do get the following in addition:
* 32GB (+16GB)
* LTE
* [Removed]
Is this worth $100? I think probably so, but in any case, I think it shows that phones in this class (flagship like devices) are actually more price competitive than people may think.
Edit: To remove wireless charging per comment.