While some might consider the the latest, greatest 2012 iPhone 5 a no brainer when it comes to their next purchasing decision, Apple keeps the 2011 iPhone 4S and the 2010 iPhone 4 around for a reason. For some people, up-front price really does matter. However, over the lifetime of a typical contract, you'll be paying a couple thousand dollars, so it's important to really run the math on this and see what suits you best.
2012 iPhone product line
For the last few years, when Apple's introduced a new iPhone, they've kept previous years' iPhone models around at a reduced storage size and price point.
iPhone 4: $0 on contract, $450 unlocked
2010's iPhone 4 with 8GB of storage is Apple's zero cost, on-contract iPhone option. Externally, it's almost identical to the iPhone 4S, so much so that almost no one will be able to tell which one you have at a glance. It has the same Retina display and front-facing FaceTime camera for video calls, along with a snappy Apple A4 processor and a good quality, 5 megapixel camera capable of shooting 720p HD video. It also runs almost everything iOS 6 has to offer.
What iPhone 4 doesn't have is the 4x faster, 14x more graphically powerful Apple A6 processor of the iPhone 5, the great 8 megapixel, 1080p camera, or the artificially intelligent Siri voice control system of its newer, better brothers. Also, 8GB of storage may not get you very far with a device this good at gaming, media, photos, and video.
If you literally have no money in your pocket walking in and really want an iPhone, if you're shopping for a teen and don't want to risk a higher end phone, if you're brand new and just dipping your toes into the smartphone market and don't want to dip too deeply, iPhone 4 can be a good starter smartphone.
iPhone 4S: $99 on contract, $549 unlocked
2011's iPhone 4S has everything the previous generation has to offer only more. The new Apple A5 processor gives it 2x the speed and 7x the graphics power of the iPhone 4... but still only half that of the new iPhone 5 Apple A6. The camera gives it 8 megapixel photos with more light sensitivity and better sharpness, and 1080p video, but it doesn't have all the bells and whistles of the iPhone 5's glass. Likewise it has a FaceTime camera in front rather than FaceTime HD. It does have Siri, Apple's virtual personal assistant and and will run iOS 6 fantastically well. The screen is smaller than the iPhone 5, however, at 960x640 and 2:3 instead of 1136x640 and 16:9. It also doesn't have super fast LTE networking, and the back is completely glass rather than aluminium like it's big brother.
You get 16GB of storage, so it's not as anemic as the iPhone 4. But you don't get options for 32GB or 64GB like you do with the iPhone 5.
If you absolutely can't scrape together the $199 needed for an iPhone, but want something better than the iPhone 4, this is your middle ground. With the new software update, it's still a great iPhone. It's just not the best iPhone any more.
iPhone 5: $199, $299, $399 on contract, ~$699, $799, $899 unlocked (availability varies by region)
The iPhone 5 is the newest, baddest iPhone on the planet. It has a new, bigger, 4-inch, 1136x640, 16:9, in-cell Retina display and a blazing fast LTE/DC-HSPA radio. It also has a unibody design with a metal back plate, 3 microphones, an improved camera, and the newer, smaller, Lightning Dock connector. It's also roughly 20% lighter and thinner than the iPhone 4S, which really needs to be felt to be appreciated. Apple offers iPhone 5 at three price points depending on the amount of storage:
- 16GB - $199
- 32GB - $299
- 64GB - $399
If you know you want a top of the line iPhone, with every feature and function Apple provides, then you want an iPhone 5.
Up-front savings vs. total cost of contract
Before you make up your mind, it's important to remember that while the iPhone 4 is free and the 64GB iPhone 5 is $399 on contract, all of those prices require a 2 year contract in the US (other countries may have longer or shorter contract terms).
When you combine voice and data plans, text and other packages, the total cost could easily work out to $2000 or more over those 2 years.
$100 or even $399 isn't as big an amount when you consider the 24 month carrier commitment and total cost of ownership of your phone. They are, however, huge amounts when you consider paying the current months rent.
I'm not going to lie to you. The better iPhone is better. But this year even the free iPhone still has fantastic hardware, is available on AT&T and GSM carriers around the world as well as Verizon and Sprint in the U.S., runs pretty much every iPhone app in the App Store, and will more than see to anyone's needs for the year to come. For just $99 more, an iPhone 4S will give you all that, only better, and throw in Siri.
If you can afford an iPhone 5, get an iPhone 5. If not, get the best iPhone you can afford and be 100% happy with your purchase.