Imagine the following scenario:


Carrier: Hello. We want to buy handsets for our contract clients. They get it cheaper, we get it back double on the contract.

Manufacturer: Cool ! We can make as many as you want !

Carrier: If you agree NOT to sell your phones to end users/shops in our country for at least double our subsidized price we guarantee we'll buy at least a million handsets.

Manufacturer: It's none of your business what price we're selling at !

Carrier: OK, then we'll buy our million handsets from another manufacturer.

Manufacturer: Ok, just kidding, a million handsets it is !



The carrier doesn't care about grey market/import devices, there's simply not enough of them to matter and they won't be serviced anyway. It's the direct channels of the big players they want covered. Guess why iPhones cannot be sold to foreigners ? See http://www.businessinsider.com/apple...ourists-2009-3

So it's the same scenario with the iPhone, except it gets worse - they manage to do an exclusive deal. For Apple, this means it has better terms (higher price) with the carrier, which, in turn, can charge more money (and more devilish contracts) for the oh-so-cool product.

Now, take the iPod Touch. It's not as distinct from other media players, it's not sold at only one shop and no single shop buys a milion of them. All of this means it has to go cheap(er) regardless if it's the same hardware.

EDIT:Non-contract prices for the iPhone are $600+ afaik.