If you pay $649 for the 16 GB Phone 4S then you will not be using a device subsidy and your upgrade will not be reset.
Why exactly would you want to pay full retail until we know if an unlocked one might be only $50 more? Note: The online preorder system is not going to allow you to just pick the price you want, it will offer you the best possible pricing option.
Dave
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Not quite the full story.
When the iPhone 3G was released anyone with an original iPhone could upgrade since the original iPhone was not offered with a subsidy. You paid full retail for the original iPhone. Hey Apple even reduced the retail price of the original iPhone by $100 after launch and offered the early adopters a $100 Apple store credit.
For the iPhone 3GS, early upgrades were offered for many customers that would have been eligible by July-August 2009. This was because the moved the launch date up by about a month from July to June and caught may early adopters in a very sour mood.
For the iPhone 4 last year, any iPhone customer that would have been upgraded eligible before Dec. 31, 2010 was eligible for the full subsidy at launch in June 2010. This was an attempt to lock in customers before the exclusive period ended and the Verizon iPhone hit in Feb. of 2011.
Dave