iPhone 5C pricing: $490 : is this a low-cost iPhone?

So apparently the price of the new iPhone 5C (off-contract) will be around $490, the same as the current iPhone 4.

But if people with a lower budget are not buying the iPhone 4, why would they pay that amount for the 5C?

This is supposed to be a low-cost iPhone is it not? Or is it just about the colours.

I don't see people that want pre-paid paying over $400, doesn't seem like budget to me.

Am I missing something?

(Source: Macrumors.com)