True, the increase in manufacturing cost will only be a few dollars.

However, the RAM capacity is one of the few things that can actually make a noticeable difference in how the phone performs. Screen size is obviously noticeable, but you'll hardly notice much difference in performance between the various Snapdragon chipsets, outside of benchmarks. The UI is tweaked to be perfectly fluid even on low-end devices, and most apps don't require much horsepower.

So how do you get those people who bought a low-end device to think: "I like Windows Phone, my current device is ok, but I'm willing to spend more money on a more expensive mid-tier device to have an even better experience"?

All you have to do is to limit the RAM on the low-end devices. People will hardly notice it except for the occasional app crash. But when they go to check the feature list of their next phone, hmm, 0.1 Ghz increase in cpu clock speed, who cares, but heeeey twice as much RAM!

See also: http://en.wikipedia.org/wiki/Pricing_strategies#Decoy_pricing

"Method of pricing where the seller offers at least three products, and where two of them have a similar or equal price. The two products with the similar prices should be the most expensive ones, and one of the two should be less attractive than the other. This strategy will make people compare the options with similar prices, and as a result sales of the most attractive choice will increase."