This makes lots of sense, depending on one's circumstances and needs. Glad you found an option that works well for you. I also paid cash for last year's model. I did my research and learned that the latest and greatest version of what I wanted wasn't that much of an improvement from the one that was a year old. With the promo I squeaked into, I saved nearly $500.
As for carrier, I've opted for an unlimited plan vs. a basic plan so I don't have to even think about my usage. With T-Mobile's 'senior' plan, I get unlimited everything (for one phone) for $50/mo, no contract. For multiple phones on the same plan, the per-phone cost is even less.
The challenge with buying an older phone is finding them from a reliable source. eBay does give ratings on the suppliers and I've had good luck buying printers there before. However, with a cell phone, I like being able to walk into the place I bought mine and talk to a live person when I have questions (which I inevitably do...) 
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