Yes, they will.
The portion of their target consumers who are locked into a subsidized 3G contract AND who will not be eligible for an upgrade next summer AND will not be willing to pay full price for the upgraded model represent a small portion of the market Apples wants.
I'm not so sure about that. I think it's quite the opposite. The portion of the market who is willing to spend several hundreds on a new iPhone every year is not as large as you may think. Millions more subsidized 3G's have been sold in one quarter than the original iPhone sold in it's entire lifespan. 3G sales dwarf the first gen. Not to mention that not only will they have to pay a fully unsubsidized price, but unless AT&T changes their terms of service, they will also have to pay an ETF. An unsubsidized 16GB 3G is what, $600? Maybe more? That, plus the ETF and you are looking at damn near a $1000 for an iPhone. You really think people are going to be climbing over walls to fork over that kind of dough a year after buying a 3G?
This means that it will be worth it to them to release another model (or two - not counting different memory) to reach everyone else, especially customers who don't have an iPhone. In order to reach these customers they are going to need to catch up to other smartphones on the market in a hurry. Don't forget that plenty of people paid the full price for the first generation, some of them even paying $175 early termination fees on top of that.
They already have caught up and over taken all smartphone, actually, all cell phones from the BB to the RAZR. And just because people payed full price and an ETF once, doesn't mean they are going to do it every year.
Also remember that AT&T allows upgrades every 12 months for any contract that is $99.99 or more per month for a single line - not that far-fetched when the data itself is $30 per month. The target customer is really the new customers. You don't have to win over current customers, just keep them satisfied enough to stay. Do you really think there will be that many 3G users that will be upset enough over a not being eligible for a $200 subsidy that they will stop using the iPhone? Far fewer, if any than those that have already ditched the 3G due to the numerous problems.