Poor people in particular fall prey to this. They want status - or the trappings of wealth - so they pay 2-3 times more for a status item than a rich person pays. The rich person goes to the cell phone store and either buys a new iPhone or gets one for "free" as part of a contract. Since they have money and good credit, they can do this.
UPDATE: One reason these sort of rent-to-own raw deals also are prevalent in impoverished areas is that people with "off the books" incomes, such as drug dealers and the like, have no credit history or banking resources. They do have wads of cash and a desire to buy bling. This sort of business caters to these folks as well - and charges them up the ying-yang in the process. However, there are far more rent-to-own places out there than there are drug dealers, so a lot of other folks are obviously using these services.