This year's new phones are for people that last bought a phone in 2020 or earlier. If the average user is on a three year upgrade cycle (what the data shows as I recall) then you'd expect roughly 1/3 of people to upgrade every year.

This is better for Apple, as it keeps their revenue more spread out instead of heavily concentrated in year one of a three year cycle.
This is better for consumers, as it means new features and upgrades are constantly being made. If they want to upgrade early they can, and they'll get new features even if it's only been two years.
This is also better for both Apple and consumers because there's more opportunities to course-correct or respond to feedback over issues. If Apple only released a phone every other or every three years, it'd take that much longer for the switch to USB-C.

Just because a new product is launched does not mean you need to buy it. Nvidia released a new GPU last year, but I didn't buy it even though it's newer than what I currently have. Arguing that new phones shouldn't come out each year is like arguing that new cars shouldn't come out each year. It makes no sense.

Person with iPhone 11 can still upgrade. Not everyone buys phone on same cycle. So they have to release it. But you don’t have to buy it.

That doesn’t solve anything though. There are improvements every year, just not enough to upgrade every single year.

And there are always people that do keep their device for several years upgrading in any given year.

Stop buying $1000+ flagships if they're not worth it. No company is going to stop producing anything that people are willing to pay for.

Because cellphones were just emerging then. The technology was rapidly changing all the time

And when you look back, a ton of the innovations were trying to solve a part of the problem that modern smartphones have solved and then some.

When texting took off, companies tried to innovate better ways than T9 to do that. So you ended up with variations of full keyboards. Slide out, on the face, swivel, etc.

Flip phones and other slide outs tried to maximize screen space before touchscreens were around or good. When the screen is only useable as a screen you have to get creative to still have a keyboard.

When cameras first got out into phones they sucked. So companies put a ton of effort into innovating that. Hell cameras are still one of the main focuses on innovation. It’s just that there are diminishing returns with what you can package in a phone. So it takes a lot more work to get a small improvement.

Beyond that, most of the innovation is under the hood and less noticeable. Improving the chip architecture to be more powerful and more efficient. On device encryption for security. Lidar scanning for 3d modeling. Better integration with the ecosystems.

Beyond those you still have innovations like the foldable, which right now still kinda suck. Just like phones did when they started trying to innovate. Foldables will lead to crazier innovation down the line with the added space. Right now they’re still just trying to get the folding screen decent.

Once a technology matures, you stop seeing massive jumps and innovation becomes evolutionary rather than revolutionary. Another 10-15 years and you may see phones slow down to laptop pace, where a new model is only released every few years and then the jump between generations is bigger by comparison because you’ll have three years of work into it rather than one.

What would you add to a flagship smart phone that hasn't already been done and is actually possible with the technology available?

The solution here is to vote with your wallet and not pay $1000+ for the latest flagship if you can buy a $300 phone from a couple years ago that's pretty much the same thing.