Step 1: price out what it's going to cost for the life of the contract on the carrier of your choice. Most of them will not sell smartphones without a hefty data plan. Expect costs to be in the range of $60-90/month. Then compare it to what's being paid now. The difference between $99 and $199 for the handset will seem like chump change.
Step 1b: also check other carriers that have acceptable reception in your area, plus their pre-paid plans that might allow smartphones, plus the MVNO "virtual" carriers such as Virgin Mobile or 7-Eleven's SpeakOut.
Step 2: After the sticker shock, if she still wants a smartphone, come back and give us an update. :-)