Benny Goldman: "I wonder how many jerkoffs went out and bought the new [16GB iPhone] even though they already owned the old one." Apparently, a fair number of people, who I don't think would appreciate being called jerkoffs, Benny. But that's how some AT&T reps treated them according to our viligant brother site's spy network, making a bunch of people extend their AT&T contracts with brand new ones. But that's not how it's supposed to go down.
The official word we got from AT&T via email is that while you do have to sign a new contract because of the iPhone activation process, your new contract should be automatically backdated to the start of the original one, so "bottom line...you don't have to extend your iPhone contract if you upgrade to the 16 GB phone." Obvious follow-up: What's the policy going to be with the 3G iPhone? Update: We did ask that obvious follow-up, but all they could say was that they can't "speculate on future plans."
You shouldn't get your hopes up for a repeat though—they're considering the 16GB phone an upgrade, but iPhone 2 will probably be considered a wholly new and different device, requiring a wholly new and different 2-year contract. [AT&T]