In the US, people who bought a 1st gen iPhone paid full price so selling them a new phone before the contract is up was/is not a big deal. Those who bought an iPhone 3G a year later purchased a phone that was subsidized by AT&T by prorating it with a 2-year contract.One thing I wonder, though, is why all this fuss is being made over the 2-year contract period of the original iPhone owners. I bought an original iPhone in November 2007, and then an iPhone 3G in July 2008 . . . there was no problem with AT&T, they just let me extend my contract. I'm very much hoping they let me do the same thing with the V3 iPhone. I think a LOT of sales would be lost if they charged 499/599 for the new phones to people who faithfully bought the iPhone, iPhone 3G, and now the iPhone v3.
I don't think you will be able to upgrade from an iPhone 3G bought in the past year to a new iPhone Video unless you are willing to pay full price.