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As Ron says, it's likely AT&T will happily sell you a new phone and extend your contract for two more years. This is how upgrading phones works with Verizon, and I assume, the other big carriers.

We'll have to disagree. Apple is not perfect, but the phrase "just good enough" suggests mediocrity, a bare minimum of features. I think it's safe to say that is not how the majority of Apple's customers view its products. The iPhone is more than barely adequate (to its owners*). And it...

That's an odd way to look at it. Apple succeeds by selling products that are superior in style and usability to the competition. (and with feature sets that are on par, or exceed, that competition) (Every product leaves owners with an "if only"; that doesn't mean they're "just good enough")...

Aren't iPhones selling like hotcakes at $600? Aren't they reported to be in short supply? Why would they offer a $200 subsidy on a high-demand item? I can't fathom it, unless ATT thinks the early adopter market is satisfied and must now target the cheapskates (like me) looking for a low...