I'd just like to point out that this might be how it works in the US, but carriers in other countries might deal with this differently. Where I live, your contract is simply tacitly extended unless you explicitly CANCEL it shortly before it expires. This wasn't a big deal in the past, because in my case the contract extension always coincided with the release of a new iPhone, which I was then able to get at a subsidised price. I don't know what's going to happen if I get my contract extension in June and the new iPhone only becomes available in, say, September.
Also, 2-year contracts are, once again, an American reality, but things might be different in other significant markets. Personally, I bought my iPhone 4 on a one-year contract, with a mind to upgrading to the iPhone 5 in June 2011.