What's the price differ from contract to unlocked iPhone 4 & 4s?

I have no idea how a contract works but heres my view.
The iPhone 4 has gone down to $0 for a 3 year contract, so does that mean I just pay for $30-80 per month? And the 4s is $159 for 3year. So does that mean I pay $159 AND the contract ($30-80)?
So would it be cheaper to go with the iPhone 4 contract, or unlocked for either.

The "contract" prices simply get you the phone for less money than the "unactivated" price. The unactivated price is what you'd have to pay to get the phone from the carrier right now without owing any more money. This is different from the unlocked price, which probably isn't available from the carrier. The unlocked phone is the most expensive because none of the phone's price is subsidized by the carrier. However, not much of the phone is actually subsidized through the carrier anyway, because you pay most of the phone's cost through the "purchase" price and through the 2 year contract. For example, service from the carrier without a new phone might cost $40 a month. But if you need a phone, you'll pay $159 for it up front plus $50 a month, even though the service plan is identical to the $40 one. Basically the 4S is going to cost more than $159 in the end, and even the 4 would cost more than $0 in the end.