I'm afraid to tell you, but it's a must. 
To take this to perspective, look at the Nokia N-series mobiles that cost roughly around $A1300~. The iPhone is another advanced phone boasting many new features, do you really think you're gonna get it for $200? When Apple sells it to Australian telcos, they don't sell it for $200, rather 1.5x that or double due to the rights and privileges as well. 
The telcos somehow need to make a profit, so they offer it for $200 with a one to two year contract which they can make a decent profit (seems fair, $50 a month to $100 month 

 24 = $1,200 to $2,400).
But never fear, outright phones are here. Buying it outright is MUCH cheaper. It may cost $500 (for the 8GB) to $1000 (for the 16GB) but it's worth it, your making upto a $1900 saving! wow.
It's certainly on par, 16GB with a 600MHz processor for a PHONE for $1000 is a damn good price.