If North Korea wants to make business or political statements, that is their choice. If another country found an Olympic "goodie bag" offer was against their morals or their cultures, they would be free to turn it down as well. It's important that countries don't have to violate their principles, even if we don't agree with those principles ourselves.
This particular decision seems like an example of the tyrannical dictatorship of North KoreA, but governments can decide to ban devices or other sponsor offers. These devices could possibly be used to spy on or otherwise harm citizens, so it is understandable that governments might want to take precautions depending on the offer.
North Korea has many laws limiting the rights of citizens. Any law that the country has should carry over to the conduct of Olympic athletes while they are in another country. Olympic athletes do get a lot of special perks and bonuses, but they should be held to the same laws as other citizens.
Governments should be allowed to keep their Olympians from participating in negative things, such as breaking curfew or drinking, but not allowing phones is way outside their reach. North Korea is only concerned with controlling all of their citizens so that the elite and powerful can remain in power. I wish their athletes could escape.