The budget iPhone: rumormongers have obsessed out the possibility for years. Though Apple hasn't – and likely never will – manufacture a new iPhone just to tackle the economy market, the company has covered that segment nonetheless. The recipe is simple: continue selling previous years' iPhones in decreasing increments of $100.

Rather than complicating its product lineup with an "iPhone Lite," Apple is now selling last year's iPhone 4S for $100 and 2010's iPhone 4 for free (with new two-year contracts, of course). This gives Apple an "in" with economy-minded shoppers and emerging markets – without betraying its premium allure.

So, on store shelves this year, the iPhone 5 is joined by its previous two ancestors. There's no question which phone is the best - the iPhone 5 is a phenomenal smartphone – but is it worth saving a few bucks on one of the older models?

Specs aren't everything, but they can suggest a device's raw capabilities. With healthy grains of salt in hand, let's see how the last three iPhones compare:

Dimensions

Dimensions of the three most recent iPhones

The iPhone 5 is longer and significantly thinner than its identical-looking forerunners. This means that it's more comfortable to hold, and it practically disappears in a pocket. This is only accentuated by its aluminum back: the backs of the iPhone 4S and iPhone 4 are made of glass.

Weight

The iPhone 5 is significantly lighter than its predecessors

The iPhone 5 could have easily been called the iPhone Air. The two older models feel like paperweights after using the incredibly light iPhone 5.

Display

All three iPhones sport 326ppi Retina displays

Though the pixels-per-inch (PPI) are identical, the iPhone 5 display gains an extra half-inch of real estate. This ups the resolution and shifts the aspect ratio to an oblong 16:9. Longtime iPhone users may find it strange at first, but will soon appreciate the extra room for apps, photos, and web pages.

Apple also opted for a thinner display in the new model. Combining a layer of touch sensors also brings those pixels closer to the surface. The company also boasts of 40 percent greater color saturation in the iPhone 5.

Processor

The A6 in the iPhone 5 offers unprecedented performance

There are noticeable boosts of speed in each successive model. The A6 chip in the iPhone 5 is a screamer, breaking smartphone benchmark records. Though the A6 was originally believed to run at 1GHz, 9to5Mac and TLDToday report that it dynamically clocks itself up to 1.3GHz (it may also underclock too, to save power).

The iPhone 4S still performs well for a modern smartphone. The two-year-old iPhone 4 is a bit sluggish for 2012 standards.

RAM

The iPhone 5 doubles the 512MB of RAM in the older models

The iPhone doubles the RAM of its two predecessors. This is another factor in its blazing-fast performance.

Storage

The discounted iPhone 4S and iPhone 4 models offer one option each for flash memory

Though the older iPhones originally shipped in different storage models, the cheaper models sold at present are more limited. The $100 iPhone 4S offers 16GB, while the free iPhone 4 gives you 8GB.

Wireless

LTE comes to the iPhone

The iPhone 5 takes Apple's handset into true 4G speeds, with LTE (where available). Actual LTE download speeds can range from 8Mbps to upwards of 40Mbps, with low latency to boot. It may be faster than your home broadband connection.

The older iPhones are confined to slower 3G speeds, though AT&T likes to label the HSPA+ 14.4 in the GSM iPhone 4S as "4G." I prefer to call it "3G+": faster than other 3G, but not in the same league as LTE.

In the US, Verizon can brag of the best coverage and widest LTE footprint, AT&T promotes its faster 3G speeds and growing LTE network, and Sprint - though its LTE is in infancy - is the only carrier to offer unlimited data.

Battery

Battery life is similar on all three models

Uptimes are similar across all three devices. That doesn't, however, make this category a wash: maintaining battery life while improving performance and adding LTE is no small feat.

Camera

The iPhone 5 camera is a subtle - but pointed - improvement over the shooter in the 4S

The camera in the iPhone 4S was a big leap ahead of the shooter in the iPhone 4. The difference between the iPhone 5 and the 4S is relatively small. Apple did improve a key area in the iPhone 5: low-light shooting.

The front-facing (FaceTime) camera also got an upgrade in the iPhone 5. This was likely done to make video calls look better on the longer screen.

Intangibles

Each option brings something different to the table

You could call the iPhone 5 the Rolex of smartphones. Its combination of lightness, thinness, performance, and beautiful design make it a significant upgrade.

One key upgrade that the iPhone 4S offered over the iPhone 4 was Siri. In addition to the faster speeds and improved camera, the virtual assistant is the top reason customers chose the 4S over its older sibling. iOS 6 adds to Siri's capabilities, letting it book dinner reservations, check movie listings, and get sports scores.

The only reason to choose the iPhone 4 over its successors is to save money. Considering that in September of 2011, you could have argued that the iPhone 4 was the best smartphone on the market, free in 2012 isn't a bad buy.

Summing Up

So do you splurge for the latest and greatest, or save a few bucks with Apple's older budget iPhones? That's your decision, but remember that the upfront cost is merely a fraction of what you pay during a two-year contract. Also consider that buying the iPhone 4 today means you'll be rocking a four-year-old smartphone when your contract ends.

To see how the iPhone 5 compares to other top handsets, check out our 2013 Smartphone Comparison Guide.

Elements of images sampled from Rolex, MomsGetReal, Wikipedia [1] [2] [3], BiggTech, Garrett on the Road, and Apple