Yes. There is a thread floating around here where it is stated that iPhones activated prior to 5/27/08 are eligible for upgrade. I've noticed this for sometime on the AT&T website where that option has been nagging at me under My Account.
If by, purchase the new iPhone outright and activate a new, 2-year contract, then yes. You will be required to activate new iPhones in the stores. You will not receive a discount if you have the current iPhone and the price will not go up because you just started a new contract a few weeks/months previously.