1 - this is the iPhoto for Mac forum
2 - You probably need to post in the iPhone forum or contact Apple
3 - I do not see a difinative answer but I suspect that you are confusing the free software upgrade to IOS 7 and the purchase of a new iPhone - It is likely that like on computers iPhoto comes with new hardware purchases but for existing hardware it still muct be purchased
Actually that offer is for phones activated after Sept. 1, i.e. new phones. The following is from this Apple webpage (at the bottom): Apple - iPhone 5s - Built-in Apps
iPhoto, iMovie, Keynote, Pages, and Numbers are free on the App Store for qualifying iOS 7 compatible devices activated as of September 1, 2013.