At first I was going to wait until December when I could upgrade my 3G iPhone to a 3G S for the best price, but the thought of that better camera resolution and video was slowly gnawing away at my resolve. I wanted a new iPhone (damn you Apple!), but I had to do something about my current model. Putting it in the drawer that has become my 'Museum of Obsolete Technology' didn't seem like a great (or cost-effective) solution. Selling it to friends is tough because most already have iPhones and are in the same boat I'm in. We've even offered some good tips in the past here at TUAW.
Then I remembered that when I upgraded to the iPhone 3G I sold my iPhone online. eBay wasn't offering much back then, so after some research I settled on NextWorth. They are one of a number of companies that will give you real cash for gadgets, and they had a good reputation. Prices depend on demand and change daily. With my old first generation iPhone, I sent it in with all my accessories and received a check back in 2-3 weeks. It was all pretty painless.
I checked them again this time, and they were offering US$280.00 for my 16GB iPhone. I've gathered all my accessories and will send it in when I get the new iPhone. That 280 clams makes the whole trade up quite a bit less painful. I also like this method rather than selling to a friend because of the "something is sure to go wrong with the phone the day after I sell it" factor.
Our readers will have their own stories and suggestions. Let's hear them -- and one tip. Before you engage with any company try a site like ReSeller Ratings or do some targeted Google searches to see how other people did with them. I might have gotten more money for the phone using another method, but the route I went has no risk and offered a reasonable trade in value.
Other online companies that buy iPhones include Gazelle, BuyMyTronics and CashforiPhones. That's not an exhaustive list, and be sure to check reputations. Searching on "sell your iPhone" at Google is a good place to start. There's also Craigslist, but you have to be careful. There have been a lot of rip-offs.
One final tip. When you sell the little darling, be sure to do a secure erase first. It takes a while, but protects you from selling your data along with your phone.
I'm looking forward to the new iPhone but hate the thought of buying the next model and the next. What's a geek to do?