Well requiring the iPhone is irrelevant to me, as I have one, and don't foresee not having one in the future.Here's the thing. A 350$ watch will last you many years, a 1k$ watch? Possibly a lifetime. The apple watch on the other hand will be obsolete after 2 years. So in that sense paying 350$ for it is quite expensive , especially since you need an iPhone for it to even work.
The upgrade thing though, that is a stinger. Just personally I would have had no problem spending a lot on the watch in theory, but seeing how 'gen 1' it seems, I'm going to limit myself because I'm likely to replace it after a year, two at the most, but I imagine that slowing over time actually, and upgrade cycles for individuals to be larger than with the phones. Although even then, with the expensive watches comparison, I was getting my Speedmaster serviced every couple of years, that wasn't cheap, and it meant being without the watch for a time.
It's far from cheap, but if it's as nice as I hope, I have no problem with that.