I wasn't elegible for a cheaper iPhone 4 until "November" (isn't all 2010 iPhones supposed to get at least $200 off?) so I shrugged it off and called AT&T. I wanted to make absolutely sure that if I paid full price, this wouldn't be an issue next year. I called 3 times before to assure that if I paid full price that I would NOT get renewed. They assured me each time that I would be fine and no renewal would take place. I pre-ordered the iPhone thru apple.com and it charged me the full $699.
I got the iPhone today, plugged it into iTunes and read the contract carefully. I did not see anything related to a 2 year renewal. I may have missed it since it was MANY MANY pages long.
Once done, I called AT&T to confirm. After asking, they put me on hold for 15 minutes. Once back, I was informed that I had indeed been renewed. Asking what my options where, they told me to go to "The apple store where I bought it" since it was "renewed by apple". I proceeded to tell her that I ordered it from their site and that the nearest apple store is 4.5 hours away. The woman was nice, so I kindly asked to speak to a supervisor. After being on hold an additional 10 minutes, I was told they where all in a meeting and that they would call me back today. I agreed and hung up. It is now 8:30 PST and still no word from AT&T.
Update: I ended up calling back and asking for a supervisor right away. Once in contact she told me she would need proof from Apple to resolve the issue. Since Apple is closed, she will call me tomorrow at 4:30 pm est. I will post my results as they come in.