Refurbished cell phones (refurbs) are a common encounter in the electronics industry. Many wireless carriers sell refurbished phones at a lower cost than new, or use refurbished phones as replacements for insurance claims. Unfortunately, refurbs also have a fairly negative reputation amongst consumers. In the sixteen years I've been in the wireless industry I would have to agree that this reputation is often well earned...with the possible exeption of factory refurbished.
There are two common ways that electronic items are refurbished. One way is that the manufacturer refurbishes the unit (or sub-contracts to a refurbishment company to refurbish the units to the manufacturer's specification or quality). Another way is that third party companies buy defective units in bulk from various sources then refurbish and resell them. But, do these third party companies have access to the original specifications? What are their quality control methods? Those are answers that are rarely, if ever, available to the consumer... that is until the consumer gets a refurb that doesn't work properly, or a series of refurbs that don't work, then the answer is pretty obvious.
Another issue is how companies choose to define "refurb". To some it means "remanufacture", or to repair and return the phone to like new function and condition. To others it means to make the phone "look" new. In other words, slap on a new coat of paint and send it out the door.
The final issue is how much time a refurb company can afford (or is willing) to devote to testing and repair and still maintain a profit. Labor is expensive. Cheap overseas labor has made profit and quality control more difficult.
Combine the above and you can see how refurbs have received a bad reputation. Ultimately, they are only as good as the company doing the work.
So, are refurbs a good deal? Unless your carrier is willing to divulge how their phones are refurbished, it is anyone's guess. Should you get a refurb? As in everything, there are levels of risk. The decision is yours. But remember, forewarned is forearmed.