I for one do not have a case either, luckily I have only dropped it on the carpet a couple of times. even when I go to the bathroom, I have one hand on the phone in my pocket just to make sure it does not go in the soup. I have heard all of these stories.
How far up was the fall? You must have bad luck or I must have really good luck because I've dropped mine onto the concrete from about 3-5 feet up at least 5 times and all I've gotten to show for it are some slight scratches and such on the back. Sorry to hear about it either way.
As for the iPhone 2, there is not even word on when or how it's going to be released but you might just want to pay the $250 and then sell the iPhone and use that money to fuel the purchase of the iPhone 2.