How did you lose it? I would imagine the size of the phone makes it a bit more difficult to leave somewhere or forget underneath something.
Unless you mean you just want to say it's lost and get the phone for just the $325 ETF?
If you try that you usually end up paying about the same as the phone would actually cost unlocked, because you also have to pay the first months bill, and they usually stick you with other fees on the final bill. And you can't really get out of it, unless you don't care that the bill gets sent to collections and put on your credit report.
The best thing to do would be to ride it out with the insurance, you did take the phone insurance right?