Hello my Friends,
I did this today to get my iPhone.
I was not eligible for an upgrade but my dad's line was. We are on a family plan.
I used his upgrade, got the phone and they gave me a new sim card that is programed to my dad's number.
I took those 2 things to AT&T and they made me buy a new sim card for my phone line and put it in the iPhone 4. I still keep my unlimited data, no issues there. My ATT store had a "get a free sim card if you buy an accessory worth $15.00 or more" deal so I just bought an AUX jack for $20 and got the sim card instead of paying $15 and getting just the sim.
Then, she gave me one more sim card to put back in my dad's phone, (since the micro sim that they gave me at apple won't work with his generic phone) and I need to call AT&T and have them activate that sim to my dad's phone's serial number. There is no etf to take off the data from his line, and my dad just has a normal phone so you basically are just giving your sister a new sim card. Her phone will not work once they process the upgrade so it's probably best that she will be there with you to get it back up and working again.
So if you are on a family plan and you are going to use her upgrade, make sure that you bring both of your phones so they can figure what the serial number is and activate it right there for you. Also, I am an authorized user on the account and I had no issues. You just need to know the last 4 of the account holder's social.