It only benefits people that want to upgrade early but are too lazy to sell their old phone. Since you're paying double, the phone is now paid off at the 1 year mark instead of the 2. But your payments go on for 2 years if you don't upgrade.
If you upgrade at the 6 month mark, you're essentially selling your old phone back to Verizon for 25% of what you paid for it. Obviously you could make more $$$ if you Craigslisted it but some people need to own the latest and greatest and are too lazy to sell the old one. If that's the case Edge works I guess.
If you upgrade at the 1 year mark, your phone is already paid off but you now have to give it back to Verizon to get the upgrade. You've basically paid full price for a loaner unit. At this point in time you could've just bought a new phone off contract while also retaining the old one so it's dumb.
If you don't upgrade, you're paying for the same phone twice over 2 years, AKA $1200 for a $600 phone. Which is dumb.