I have seen a prepaid device literally self-destruct from a combination of market segmenting and artificial firmware restrictions.
Edit: There was no CM support, no way to delete bloatware, forcibly disabled SD storage support, and non-optional updates that eventually rendered the device unusable. The two end-user choices were to either remain offline or get stuck in "not enough free space" loops.
I too am running android 2.3 on my aging phone, thanks to cyanogenmod. Unfortunately, they do not provide any newer version for this particular model.
The case is all scratched up, the protective glass has been replaced two times already (and is up for another replacement soon, touch tends to stop working on cold days in bottom part of the screen), but I am holding on to it, because I haven't seen any newer phone that I wouldn't hate.
They're all either too big (remember when it was cool to have as small phone as possible?), or they lack features like unlocked boot or even a SD card slot.
I'm thinking of going back to some dumb feature phone, if I can find one with good support for importing contacts from outside.
Edit: There was no CM support, no way to delete bloatware, forcibly disabled SD storage support, and non-optional updates that eventually rendered the device unusable. The two end-user choices were to either remain offline or get stuck in "not enough free space" loops.