I guess I've just never seen this. All I've ever seen (and what I most remember is the Keynote in January) is $499 & $599 with two year contract. Thats it. No mention of specifics for existing customers (i.e. customers in the middle of their AT&T contracts).
I, like you, thought that I would just extend my existing contract no problem. But why? AT&T doesn't do that for any phone. You either pay full retail, or you have to be eligible for upgrade or at the end of your contract. What brought this about was the wording on the ads (which, admittedly has been removed, but no one knows why). And that got me thinking that I had never considered that the iPhone would be sold just like all other phones, but why wouldn't it?
Every experience I've had with moving to a new phone in the contract period has been similar. You can get a new phone (at a subsidized price) with an additional two years added to your sentence, er, contract.
The problem arises with moving in a contract period with a subsidized phone into an extended 24 months with an unsubsidized phone. That's where a lot of confusion is arising.
What's the subsidization for? The equipment. So you bought X phone with a two-year contract, subsidized. That's the end of the subsidy on the equipment, because they're getting it on the back end, the service, which you are contractually obligated for.
What I'm most confused about is the (seeming? apparent?) lack of a month-to-month plan. If the purpose of the contract is to subsidize the equipment, and the iPhone isn't subsidized,
then what's the value (to the consumer) of the contract?
Bottom line, with Apple driving this, all bets are off. Keep in mind what Steve's getting accomplished with the music industry model. Completely broke that, too (well, in the process of breaking, but still...).
I can't think of any industry today that's as unbelievably convoluted and intentionally vague as the US cell phone industry. The idiots that run these companies should have to actually go into their own stores and purchase & activate a phone. Then they should have to explain their monthly bills at the shareholders' meetings.