A: If the smartphone is for business, and your own productivity can be improved with a quality device, it is more cost-effective to replace the premium unit every year, and then sell your old device.
Think of it this way: If a premium phone costs $800, and a low-end phone costs even $0, you replace the phone yearly, you can likely sell the premium phone for around $400-$500, then the premium phone will cost you $300-$400 per year to own. If you work the typical 2,000 hours each year, this works out to cost you $400/2000 or $0.20/hour.
The typical premium smartphone is 2-4x faster than entry-level units. If the faster unit can improve your productivity/effectiveness by even a single-digit percent, it more than pays for itself.
Add in the lower total cost of ownership (premium devices have lower downtime, lower frustration with bugs, and if we are talking iPhone versus Android, much better security & privacy records), and premium is the only way to go - if this is a business device.
On the other hand, if this device is strictly for personal, non-business, non-productivity use, I still recommend going for a better quality device, not low-end. This is based entirely on the issues of lower frustration factor, and security & privacy.