Now the flagship Android phones are Samsung Galaxy S3, and HTC one X. Both use Qualcomm latest S4 dual core CPU and have 720P display. One X has the best display, as good as iPhone 5's and overall feeling on hands, GS3 is better in all other areas, such as
* UI smoothness
* Better picture/video quality.
* Louder/Better voice quality.
* MicroSD slot
* Bigger battery and removable.
* 2GB RAM.
You do see/feel the difference between high quality phones and cheaper/lower quality phones.The major difference mainly in the area of camera, display and reception signal. I don't agree what you said about laptop(no big difference between the cheap and expensive ones). If you pay attention to Apple MacAir/MacPro laptop and other laptops, you do see the big differnece in the display(viewing angle and brightness).
In term of the plan, prepaid is much better deal than those 2 year contract(usualy end with $70-80/month after tax and regulation fee). If you like AT&T network/signal, check out H2O and straighttalk, both use ATT network. H2O has 5c/min prepaid plan if you don't call that much.
If you use data a lot, the best deal is T-Mobile $30 prepaid plan(which include 5GB data and 100 mins talk) at Walmart.
If you prefer Verizon, then check pageplus(5c/min prepaid) and other flat rate plan.
All prepaid plans don't have extra charges(such as sales tax and whatever stupid fees).