At least in Australia, UTMS coverage is better on some carriers then GSM is. One of the carriers is even starting to convert their towers from 900MHz GSM to 900MHz UTMS. GSM can be considered dead at this point, and I think a UTMS chipset would be just as cheap, or cheaper than a GSM chipset.
Aside from the fact you just (re)invented the original iPhone, I don't think that's a device people would pay $300 for (add a bit to get Apple level build quality and profit margins).
This. A basic GSM phone costs less than $20; attach it to an iPod Touch and voilà: a cheap iPhone!
I've been wondering if this is true for a long time, but couldn't find an educated answer...?