The problem is that this phone would likely be on the same data plan as smart phones -- especially as HTML5 comes of age. So while the phone might be marginally cheaper (a 3GS is what, $49?), it'll still cost you the same amount per month. That makes it a non-starter.

That's largely what happened with the Kin. Of course the great untold story, is that the Kin is selling really well now -- as a feature phone.