I photographed this on a phone kiosk just this morning:

CNet says of that phone:
The Samsung Intercept has Android 2.1, a 3.2-megapixel camera, GPS, Wi-Fi, a colorful display, and a great QWERTY keyboard. Call quality is good. … The Samsung Intercept is a suitable Android alternative for Sprint customers on a budget.
And here’s the VirginMobileUSA page.
I don’t know about where you live, but MetroPCS here does freakin gangbusters business. They are in that same market: low-cost monthly prepay. But, last I checked, they don’t have any Android phones worth getting. They do, however, have the Blackberry Curve.
What Apple doesn’t want is to lose people to “good enough” phones. This is a threat to their longevity.
It also doesn’t mean anything good for Palm’s webOS, either.
When I see how much AT&T wants for iPhone each month, I think they’re out of their minds (which is an update from my original position). And Verizon is already licking its chops over what they’ll gouge charge iPhone owners. Here, VirginMobileUSA is offering the same 5GB data cap for far less money. And as for the fewer voice minutes, that’s already more voice than I currently use with my crap voice-only prepay phone. (Does anyone use voice for anything other than extreme emergencies or a someone has died call?)
Apple will need to address this market — at a competitive price too. As does Palm with webOS. Otherwise, Android phones will own it.
And don’t laugh at the fact it’s a Samsung Intercept being offered. You think the phones offered won’t get both better and cheaper? They will.