People are buying phones less often, so Apple is trying to increase the value (and subsequent price) of new phone models to encourage upgrades and to capture more money when people do upgrade (either because third party apps now run slow on the older hardware, or their old phone broke).

People don't stop buying gas when the price of gas goes up. They just conserve and figure out how to make it fit into their budget.

Also, Apple isn't (and has never) been trying to target the highest end phones at developing markets. They'll target those markets with the iPhone 6 and 6s.

That did not went well in the mid-90's if it weren't for the inverse acquision of NeXT.