iPhone too expensive for UK market and unlocked in Germany

MacNN has a good article on the iPhone being too expensive for UK market which I couldn't agree with more. When Apple brought the iPhone to the UK it seems they didn't do any research on our mobile/cell phone market. They took the model they used in the USA and moved it over here. For anyone not familiar with our model its simple.
  1. No phone (with contract) costs over £200 ($400), My Nokia N95 cost £70 this year when I renewed my contract. The iPhone is £269.
  2. The more expensive the contract the cheaper the phone. For example my N95 on a £20 per month contract would of been about £199. If I went for a £40 contract the phone would be free. The iPhone is £269 regardless of contract price.
  3. 80-90% of all contracts are for 12 months. I know that companies are bringing in 18 months but it's not de-facto for now
  4. UK is on 3G
Its because of these reasons that everyone I know isn't keen on getting one. Actually the reason most of my friends are quoting is, "it'll be free with a contract soon". Or "it'll be on Vodafone next year", little do they know O2 have a 5 year contract to sell the iPhone in the UK.The reason I'm not getting one (and I am so sorely tempted) is that this also isn't a new Apple product. 2nd generation models will be out year, expect a new model come Q3 or Q4 at the very latest. Just as the U.S contracts are running out. And that no doubt will have 3G and all the other feature that anyone could need. Though I don't doubt that iPhone will do well and I suppose that my point is that they could of done so much better.BTW there is still a chance that running an unlocked iPhone might not be breaking the law afterall! After Vodafone obtained a restraining order against T-Mobile over they iPhone selling practices it looks like T-Mobile will actually sell unlocked iPhones in Germany