early upgrade fees

I waded through more legal mumbo jumbo on the at&t website than you would believe. I'm at least half smart but can't conjure up $250. I'd bet a Big Mac that the CEO of AT&T couldn't explain where the proposed charge came from.

Don't really want to cancel. Just want my wife to get her S5. Why are the cell phone companies so irritating?

.....there is no workaround, short of paying full price to get a new phone. There is nothing wrong that the cellular company is doing. If you got a phone at a discounted price, you are obligated to complete that contract before you get another discounted phone.

If ATT is still doing what it used to, it's based on how far along you are in the contract. This is four or five year old news.

My advice? Tell you wife to wait until her contract is up. Factor in how quickly the Samsung line of phones lose value and it's a losing battle. I don't see the S5 as being much improvement over the S4 either. I've seen the S4 available for as low as $0 + upgrade fee of $36. That was either at Radioshack or Tigerdirect (retail stores), but I am not 100% certain. Your other option once your wife has completed her current contract is to buy a refurbished (=like new) S5 online from the ATT site a few months after it came out. Normally it's discounted between $50-100 per phone. I have probably bought upwards of two dozen phones from ATT this way w/o any problems. YMMV.

Here's another tip for you. If she went with an iPhone instead of a Samsung, she would have the added benefit of being able to obtain a replacement phone directly from Apple at a discount, regardless of whether the phone was still under the first 12 mos. of factory warranty. This is Apple's OOWS (out of warranty service). It's at least partially why they are premium priced. No ETF fee from the carrier either in this case.
If it's damaged, she can buy another one at significantly less cost than the full freight via the carriers.