Genuine question, not intended to be rude, but how are you using "upgrade" here? I was under the impression that it was always best to stop paying the full monthly cost of a contract as soon as possible (ie once your 18 months is up) because you've essentially paid off the subsidy on the phone - did you think they would give you a new iPhone at more of a discount than if you just started a new 18 month contract when the new one came out? I thought you were always eligible to upgrade once your minimum contract was done, in the sense of being eligible to sign a new contract (with the same pricing etc as if you were a new customer). Or am I missing something?
I was in the same situation as you and dropped down to the £20 simplicity deal as soon as my 18 month contract with my 3G was up in January. I get 600 minutes, 1200 texts and unlimited data for my £19.99 a month. I'm not sure how this compares to other deals, but it's only 30 days' notice, so I'm not tied down for 18 or 24 months.
This is mainly because I'm an idiot, I didn't look at simplicity tariffs until recently and last time I looked (some time last year) they didn't include free data... I've downgraded contract now.
Still want an iPhone 4 though