Thanks, Cary-- I am on digest and didn't see your reply here until just now.
I think it worked out okay, relatively speaking. I'm out of contract now, so whenever a new iphone comes along, I'm free to get it with a new contract, if I want.
What really bugged me is they're GIVING AWAY FOR FREE 3Gs phones, but they charged me $75 for one even though I had AppleCare for two years and the phone had just died two days after. They wanted $150 but I worked them down to $75.
I asked the guy, "SInce you're giving away phones that are not even as good as what I had (8 GB, not 16), can't you just give me one of those? I won't even have a phone as good as what I had before it broke!" He just looked at me like I was crazy. "Oh, we can't do that at all!" Jeez.
--Van