Why do phones cost so much without a contract (and what would you suggest)?

Ok, Kinda long story

So it was just last month when I noticed that I could Upgrade My Contract and get another phone for Super Cheap....I found this one phone called the LG Expo and I really wanted it. However, it had some kind of production issue and it wasn't available on AT&T wireless.com. I considered Amazon.com but I was appalled at how people who upgraded they're phones had to pay 150 more dollars than people wanting a new contract. After a fail attempt at trying to get the phone off of ebay I gave up and settled for the Samsung Mythic (which I'm starting not to like).

Less that two weeks after I get My mythic I notice that the Expo is back in stock on At&t and A week after that I see that it is going for just $50 for an Upgrade (and that highly pisses me off). I look to see how much it costs without a contract and I see that the Price is still a Whopping $450.

Why do phones cost so much without a contact? And what Can I do to get the Expo for $200 or less? I don't think I'm going to make it 2 years with my current phone...