Yes, I've definitely seen many people extolling the virtues of prepaid and I agree that prepaid is a fantastic option for many, but there are reasons why contracts are fine too.
Besides the psychological barriers to putting down an extra couple hundred to save a little money every month (where only in the aggregate do you start coming ahead), many of us just can't afford to drop that much cash at once for a phone. Not only that, but many have families, making that very expensive very quickly.
Speaking of families, prepaid doesn't cater well to families either! For most carriers, you can add a line for what, $10 a month (I use T-Mobile)? In my family of 4, a family plan would cost around $100 to $110 (without data).
The cheapest prepaid plans are now around $30 so a family of 4 would cost $120. Granted, that would include data, which I don't have. But with a contract plan, I would also get unlimited calling to others on the same carrier and free calling at night. Many Americans still actually use their phones as phones, so that's a huge plus that prepaid carriers don't offer.
So while prepaid works for many, it still isn't the perfect solution for a large majority of us.
One sidenote: If you're on T-Mobile, you can wait for phones to go on sale for free after 2 year contract and then get the cheapest data plan ($10 a month for 200mb) and your cost of the smartphone comes out to $240 over two years. Yes, if you HADN'T gone with the subsidy and brought your own phone (not to prepaid, but the other option T-Mobile has), your plan would be $10 less per month, but if you have a family, the benefits stated above quickly make that $10 feel a lot weaker. PM me if you don't quite understand.