Does Apple need a low end phone?

I always believed that Apple needs to play in the mid to low end segment to accelerate the growth and more importantly, the penetration of iPhone beyond a certain class of people who could afford a cheaper phone and pay as you go data plan. I believe this is where the action is.

Pre-Paid World

The pre-paid concept is quiet alien to many people in United States. But the rest of the world, especially the developing countries in Asia, Africa and South America, the pre-paid market trounces post-paid market by 9:1!
Apple wants to get in that game and eat that pie.

I thought that Apple will add a smaller screen device to fill that whole and get in to a lucrative market of pre-paid world. A smaller screen will fit nicely in every single continent. But as I was thinking more about it today- a thought came to my mind. Would it be smart for Apple to sell its unlocked 3GS, the same phone currently sold FREE on most cell shops today with a 2 year commitment? The price can be around $199 to $250. iPhone 5 is soon approaching and the iPhone4 is almost 14 month old. By the time the new iPhone comes out, an unlocked iPhone4 can be listed by Apple for 399-450$. Thus can catering to middle class section. Who wouldn't mind paying something more to get in to ever-growing apple eco-system. Apple will still sell millions if iPhone5 with huge profits.
By keeping one screen resolution phone, it will make it easier on developers to code the way they always have, without having to worry about an additional screen size and a new resolution for their apps to work.
Lets see what Apple has in store for us next month.