iPhone will not be offered with any activation or upgrade discounts

We have confirmed with several AT&T/Cingular retail locations that there will be no activation or upgrade discounts for the iPhone that bring the cost below already announced pricing (US$499 for the 4GB model or US$599 for the 8GB model). In other words that is the minimum anyone will pay for this device, based on current information -- the upgrade/activation discount is built into those prices.

What is not clear, is whether or not anyone will be paying more than US$599 for the iPhone if their contracts are ineligible for the required 2-year activation.