The iPhone 4S

[baja_yu]

Mmm, no... 16GB of storage was $30, $60 for 32GB (2x16GB) and $120 for 64GB (2x32GB), about a year and a half ago. That would mean (assuming the costs are the same today) they're making $70 for you to upgrade from 16GB to 32GB, and $40 for you to upgrade from 32GB to 64GB. (This however was what they were making back then though.)

The iPhone 4 cost breakdown puts the (16GB) flash memory at only $2.5. And since 64GB USB flash drives retail for $50 and up, I'm inclined to believe that the cost of it for Apple is actually $10 or less.

Correct, but when they do start responding I believe we'll see several things:

1) Inaccuracy (this is just a guess)
2) Significantly longer response times
3) Larger amounts of data sent

Only point 2 could happen. 1 can't happen because the processing algorithm will be the same, software is software. Only thing that can influence this is the quality of audio recording, but I doubt 4S has some magical microphone. I'm guessing you're basing point 3 on what that guy said about the GPU coding the voice into a small pack of data. That has to be done other devices as well, one way or the other. The server won't know how to respond to anything else other than what it's programmed to accept. It's not like you can send it an MP3 file and expect it to work with it.