I'm really the opposite. I like to research and find the best phone for the lowest price and then abuse for as long as its useful. I really dont like to pay money to downgrade either. I held onto my poor battered Lumia 521 for too long because the 635 was too much of a trade off to feel good about spending an admittedly small amount of money on. I waited and got the 640 a few months back and am almost completely happy with it. I just wish the same specs and features existed in a smaller package (and included a shutter button). Basically the specs and features of the 640 (or better) in the body of the 635 (again, with a shutter button) for $100 (or, you know, less :grin: ) is my dream phone.
That being said since I already bought the 640 it would take a lot for me to buy another phone just because its smaller. But suppose I completely obliterate my 640 the day the 550 comes out and I have to buy something to replace it. If the 550 is smaller and more comfortable to hold I might be happy about that but I probably wouldn't be interested in spending extra on it vs the 640 which is actually better in many ways.
So it comes down to the $140 being a little weird because i think most people who aren't me would prefer the bigger screen on the cheaper 640 anyways. As was said earlier, in unsubsidized markets where the 640 is actually more like $200 then people will probably be happy to save some money and get the lesser processor, lower MP, and smaller screen. Heck, I grew to really enjoy the 5mp sensor on my 521, lack of flash and all. And at least it has 1gb of ram. If the 521 did I'd probably still be using it. If disaster does strike my 640 and the 550 actually ends up selling for significantly less than the 640 is at the time I think its a good enough phone without any major drawbacks that I could see myself save some money and still be satisfied with it. Especially if the screen quality is up to the 640 which IMO punches above its weight class in that category.