I'm torn on this point.
I agree, a couple of hundred quid isn't much overall, but to continue to support a company which imposes these increases year on year only leads to consumers being negatively impacted.
Having said that, using the terminology "justify spending that much on a phone" isn't right, is it? Is that a fair assessment of the product? For sure, it's a phone, but it's so much more than that nowadays. It's a fantastic camera for both photography and videography, it's an internet browser, it's all your social media platforms, it's your alarm clock, it's all your banking services, it's all your debit/credit cards, all your store cards, it's interactive maps, it's a translator, it's YouTube, etc. etc. - sure, the old products were those, too, but to a lesser extent were they as good at doing said things.
And there's always the option to sell your phone at the end of your contract, should you have one. I'm not sure it's a reliable measure but a £1,000 phone must be worth at least £300 in two years, as such it's cost you £700 over two years, or rougly £1 a day - some folk spend three or four times that daily on coffee alone.
I'm not necessarily glued to my phone but the value I get from daily is invaluable. And with incremental updates year on year, I do believe they represent great value for money.