My daughter likes to reach for the phone when my wife is talking. Especially when she hears my voice over the speakerphone. (Hey — she doesn't know any better yet!)
So we got her her own phone so that she could talk just like Mommy and Daddy. My wife was looking for an inexpensive phone and found one at an import store for $3.99. It was likely Japanese — The Benign Girl Super Telephone. It played four kitschy noises that reminds me of an anime cartoon.
After a few days of playing with this phone, I realized how loud it was. I put it up to my ear just like I was talking on the phone — or like my daughter would if she were imitating Mommy or Daddy — and it hurt to listen to the sounds. We put a few pieces of tape over the speaker to make the sound softer, but it was still pretty loud.
Then, my wife found the Little Tikes Call of the Wild™ Play Phone for $9.98. Not only does it actually say the numbers when you press the keys (the other one doesn't), it can say the numbers in three languages! The other, probably more important, feature is that it's hearing-safe. It doesn't hurt to listen to the phone.
Hearing loss is caused by the cumulative effect of exposure to loud sounds. The fact that it hurt to listen to the cheaper toy phone is a warning that the volume is too loud. The American Society for Testing and Materials sets standards for loudness of hand-held toys to 90 dB (they're working to get this threshold down to 85 dB — the level at which prolonged exposure can cause hearing loss). ToySafety.net talks about this in more detail. I'm not sure where the Benign Girl phone was sold originally, but they may not have such standards.
A sign of a cheap toy is not just the construction. If it's too loud — and there's no way to control the volume — it could damage your child's hearing. Now, I'm not all for spending a fortune on toys, but safety, which includes hearing safety, is more important than cost.