I've been in this EXACT position before and what 
you should say to the seller is the following:

"I am still interested and am willing to buy the 
cel for $XX, which was the amount of my high bid 
before [nonpayer's ID] became involved."

Of course, the $XX is the amount that you would 
have paid without bids from the nonpaying high 
bidder. (Meaning, it is the next bid increment 
over the maximum of any *other* bidder that was 
involved with the auction, other than you or the 
non-paying high bidder. This can be found in the 
bidding history.) If they don't accept, walk away.
My guess is that they will accept, assuming they 
want to sell the item.

It sounds harsh, but it's far too easy for this 
non-paying bidder to have been a shill. Although 
shill bidders rarely win, when they do win, the 
seller gets to claim a non-paying bidder to get 
their fees back... AND gets to (try to) sell to 
you for more than the real ending price of the 
auction. Don't allow it.

Even if the non-paying bidder is not a shill, and 
the seller is being completely honest, it's still 
not YOUR problem that there was a bum bidder on 
the auction. There's no reason you should pay for 
someone else's childish bidding games.

Many Sharp Smiles,
--Drac