You're paying for the phone.
The 3G is just an accessory, you don't need to buy a contract.

What I'm trying to say is that instead of paying $300+ for another device, why don't you just carry one?

For $50-$100 more, you get a device with much better community support, the option of using it as a phone, get mobile internet, and probably a longer "obsolete" time.

Besides sources say these Galaxy S MIDs (yes I said mids) aren't that good quality as mids, probably due to glossy screen, bad mic, quite speaker, small battery etc etc. If you can compromise with an average quality mid, then getting a Smartphone is a better option, no?

But if your question is about a $200 tablet then you do have a point, since tablets are meant to surpass what you [can] do on a Smartphone.