> The "free" phones cost significantly more than a full price phone

I buy phones at full price, but in general the free/subsidized versions don't cost more. You just pay over time. For many people, it would even be worth it to pay somewhat more if they don't have the money to pay up front.

One downside though is that you're more likely to upgrade to features you don't need because "it's only an extra $5/6/10 per month". Gotta always consider the total cost.