If you aren't doing a discounted plan for paying for your device in full, you're typically paying $20-$25 per month in device reimbursement - even after you've fully reimbursed your carrier for the up-front subsidy on your device.

I'm not saying you shouldn't be on that plan at all, but just recognize that once you are eligible for the $199 upgrade, any more months on that plan mean you are paying the carrier for a subsidy reimbursement even though you've already fully repaid them.

So when you say that you're surprised that people are lining up to pay such a high price, realize that paying that high price upfront means you don't have the potential to pay the carrier extra at the other end of the contract.

Further, in the case of AT&T, a new phone means a $36 activation fee if it's a subsidized phone. If you just pop your SIM in an unlocked, full price phone, this isn't an issue. Not sure what you do in your case without your SIM, but I suspect an AT&T store would give you a free SIM to replace your lost one.