You don't have to buy it with each iteration, but at the same time if I'm buying one, I don't want to buy hardware that's many generations behind current one.

If I build a new PC myself - I don't have such problem. With laptops - it's a bit behind (usually one generation for AMD with their APUs approach). I don't think anyone complains that there is a choice.

And somehow above doesn't prevent games being released that can scale according to the hardware and aren't tied to a specific hardware generation target. So I don't really see why this has to dictate handhelds to have way slower refresh cycle.