As long as it's just a typical 2 year contract upgrade, yes. If it's Early Edge, then no.
Actually, they can still get "Early Edge", too, but will be charged a $299 non return fee when the old phone is not returned.
Ha. Forgive me, I just always assume people don't just have money to give away. (:
True, but if they want a new iPhone and don't have the $700-$800 right now for it, those monthly payments are pretty tempting for some. Of course that will not keep them from complaining when they get the $300 charge for not returning their previous phone in good working condition without any physical damage.
For $300 they could most certainly find a decent working used phone, it just wouldn't be hottest next thing.