I agree there is no replacement for parenting. For me this is not about trust, this is about protection and the ability to contact my child and for them to be able to contact me whenever they need to. I live in South Florida, and as much as I dislike it here, I'm here to keep the kids close to their grandparents that retired here. This place is crime ridden and any extra measure of protection I can take, I'll take it. As I mentioned earlier, my kids are 7 and 11. When they're teenagers, maybe my position will change on the smartphones.
I grew up in a small town, everyone new me and my parents. If I got in trouble, they were going to find out. I don't have that same luxury with my kids even though I would like to. Short of hiring a bodyguard to protect them when I'm not there, I'll take whatever steps are necessary and sensible to keep me better informed, including spending a couple hours with them every day so I know what's going on in their lives and the people they hang out with. I don't consider this bad parenting, I think it's very sensible and appropriate.
Additionally, they already had itouches, psp's etc. Instead of those game platforms, now they have the droid, which they always keep with them.
As for cost, I was paying an extra $10/mth per line plus $10/mth per line for Verizon's Family Locator service. With Verizons new promotion, I am paying the same $20/mth and getting more services, and as I had upgrade discounts available, why not a smartphone.