Are they really cheaper? Last I looked if I purchase an unsubsidized and unlocked phone, I still pay the same monthly service fees to AT&T, Verizon or Sprint. They don't give me a discount. So the only benefit is the ability to stop service at anytime. But since I can't use their phones on another service where does that get me?

Yes, T-Moblie or the service resellers (Virgin, Credo, SmartTalk, etc) may provide cheaper monthly service with your unsubsidized phone. However, I have found them to be inferior in their service (technical, coverage and/or administrative) compared to the big three

At least, that has been my direct experience and research. I am actually hopeful that this will change in the coming year. I would very much like to take this path with my next phone.

Exactly, for someone like me who doesn't make international trips, the only benefit is not "being in a contract" which gains me practically nothing other than being able to leave on a whim. But to whom would I switch really?

Unlocked phones are a big deal to people in Europe, people who travel internationally a lot and people who just want to have an unlocked phone.

That said, when my contract goes up, I will be getting AT&T to unlock my phone because it makes it easier to sell should I desire.

I forgot to mention the international travel angle. I think that I will get my old iPhone 3GS unlocked for use in Europe if I need it in the next couple of years.

As one commenter points out on that page, this may only be true for plans with a single phone. I have a family plan with 5 phones on it, and I couldn't find a prepaid account with comparable service for the same price.