No worries: AT&T doesn't want your grubby, used iPhone when you upgrade
Seems there are some rumors floating around today that AT&T plans on scooping up the old iPhones of subscribers that come into stores to upgrade to the iPhone 3G at the tantalizingly subsidized $199 / $299 prices for the 8GB and 16GB models. This feels totally bogus at first glance, considering that some of us have destroyed our iPhones in one way or another, sold them without changing plans, or otherwise made our devices disappear permanently enough to be unavailable to the clerk at the store. We checked with AT&T, and sure enough, we're happy to report that there won't be anyone at the store giving you a pat-down and confiscating it -- the only circumstance where you'll have to turn it in is if you're taking advantage of the exchange deal for folks that bought it since May 27th. So, you know, resume making sure that your eBay and PayPal accounts are in good standing.
Update: To be clear, anyone taking advantage of the $199 / $299 pricing will need to enter into or extend their contract by two years. Though many (most?) will be able to make that happen, AT&T says that there will be a "non-qualified" upgrade price as well, though the terms of that qualification and the actual pricing have yet to be disclosed. Obviously, we're following this one closely.
