No, lets take me as an example and I'm the one making the claim for the tariffs I've looked at

I'm on O2 at the moment and have no urge to change network. I am on the £35pm tariff at the moment.

If I buy a new 32GB contract phone on the £35pm tariff it will cost me £279. Over the 18 month contract it will cost me £909

If I switch to their £15pm "Simplicity" tariff (which has the same benefits as the £35pm contract one) I then have to buy a contract free phone at £599. Over 18 months it will cost me £869 (and I only actually have to commit to the Simplicity tariff for 12 months).

I didn't claim that the iPhone was cheaper on non-contract for all tariffs and all networks. I said it was cheaper for some.

Throwing some number into Excel shows that for O2 it is only the £35pm->£15pm swap that makes the non-contract phone cheaper, for all the more expensive tariffs it is cheaper to go with the contract phone:

35->15 4% cheaper on non-contract
40->20 3% more expensive on non-contract
45->25 6% more expensive on non-contract
50->30 11% more expensive on non-contract
65->45 18% more expensive on non-contract