From what I could gather, they are chinese clones and they are cheap because they use the cheapest parts possible.
Yes, and there is no money invested into their design either. Brands tend to extensively test and research their designs (some more than others
) whereas these imitation phones have little thought put in. The phone is less ergonomic and won't be as responsive (for instance to touches) plus components will fail (e.g. one day the mic, a month later the main button, two months later the casing breaks).
It's fun to play with these cheap phones because you really do get a fully functioning device, but I wouldn't pay more than £15 for one and I certainly wouldn't rely on it as a main phone.
One new area to look is Indian phones. Indian phones from companies such as Videocon have a lot more thought put into their operating system and build quality, while still being substantially cheaper than their Japanese/Korean counterparts. The quality will still be lower but it is an actual useable product, ideal for someone who always loses their phone. I don't know how easy they are to buy from the UK though.
Personally I like to buy used. Look on Gumtree and classifieds in your area, you can usually make a big saving and you pay in cash so people are willing to take a lower price than they advertise, and of course you get to test/feel the product before you buy. Always take a friend though, I haven't heard of anyone getting robbed but it's always a possibility.