I think the vast majority of non-techies aren't used to smartphones (yet)...but they hear about various things you can do so they get excited about it. But their level of excitement probably ends at geotagging photos or maybe tweeting from the top of the Empire State Building. The average person probably has little interest in going to XDA and spending too much of their lives (like we do) scouring forums for tips and tidbits to do things like overclock the phone and learn to tether for free.
Besides, for every 10 people that go from a flip phone to a smartphone, most will slowly start to realize some of the cool things you can do. Maybe one will actually get so into it they go to XDA and become a developer or at least an active community member. Think about it - we all started somewhere. Some of the names on here with more green bars than I can count were just getting started cooking ROMs for the XV6700 and that was only 4-5 years ago.
We've all been thinking, living, breathing smartphones for <insert length of time...for me it's about 5 years>; some in my family are still carrying RAZRs, though I think I've convinced them to get iPhones now on Verizon. They will use 1% of the features at first, but over time they will discover things that can be done, and this is the evolution of the industry and the market.
I find it is best not to poke fun at someone's $200+ (plus $2400 long term contract) purchase; they tend to get kind of pissy when you ridicule financial decisions.
