I have AT+T too and when I checked my account my contract ends May 2013 and if I wanted the iPhone 5 I would have to pay a lot more than someone getting the phone as a new customer. The one I wanted was the 64gb one which is 399.00 for new customers but 650.00 for current customers just for the phone
On AT&T, the primary line is eligible for full upgrade discounts @ 18 months & other lines are eligible @ 21 months. That only applies if your account has been kept in good standing.
you are capable of buying it outright and replace your older model on your plan but understand that you will not be getting it for the cheaper price that perk is only for new customers and customers upgrading... if you buy it outright though you will have to check to see if it will have any negative repercussions such as losing insurance