The Android clusterfuck is a completely orthogonal issue to whether last year's high end model makes for a good this year's low end model. For $450, it should be perfectly possible to build a faster phone, running current software with a better screen and better battery life than the 3GS.
In fact, I wouldn't be surprised at all if the 3GS processor is costing Apple more at this point than the 4 processor due to a larger die size and outside licensing fees. Paying more for a worse processor is something that you would never do if you just built a low end phone from scratch.
edit: For example, the Samsung Galaxy Nexus (http://www.amazon.com/Samsung-GT-i9250-Smartphone-Touchscree...) is $450, is running Android 4.0, has twice the Mhz, twice the storage, 3x the resolution and 1.6 times the camera megapixels, all for the same price.
While it may be true that the old processor costs Apple more to build than the new models I strongly believe that they didn't want to test the device again.
The device worked as it is and it will work in the next year as it worked so why should we change it? No costs on this side to find.
We can argue about costs and which of them would be higher but either way I think they choose the way which fits Apple best.
Apple wants to mess with new stuff and not with old already gone low-end model phones.
I don't know how non-tech-users see the nexus. I never seen one have it. I don't know why but it seem that the majority was bought by techies compared to a 3 GS which was bought from all kind of people including a lot of females which argue "I don't need the latest stuff".
You're talking as if Apple continues production on the 3GS. Do they really, or do they access old stock? I'm genuinely asking as I don't know - I had assumed they accessed old stock.
They've been selling the 3GS continuously since summer 2009. Of course they're still making new ones. Tim Cook wouldn't have his current job if in his old job he'd accidentally booked years of surplus units.
In fact, I wouldn't be surprised at all if the 3GS processor is costing Apple more at this point than the 4 processor due to a larger die size and outside licensing fees. Paying more for a worse processor is something that you would never do if you just built a low end phone from scratch.
edit: For example, the Samsung Galaxy Nexus (http://www.amazon.com/Samsung-GT-i9250-Smartphone-Touchscree...) is $450, is running Android 4.0, has twice the Mhz, twice the storage, 3x the resolution and 1.6 times the camera megapixels, all for the same price.