For all of the people that are saying just swap the sim and reactivate and your fine..
where are you getting your information from? Have you actually done it?
I just bought the 16 Swapped the sim with my 8gb.
The 16 would not recognize the 8 gb sim and on the phone it just kept showing the connect to itunes picture.
After a few hours of waiting i connected to itunes and reactivated choosing the option that says that i am already a att customer and want to reactiivate. Or something like that cant remember the excat wording
After i reactivated i checked my account and saw that it had been extended another 2 years.
I then fought with att for three hours and about 6 calls to finally get a manager to put my contract back to 6 months.
According to att an replacement from iphone to iphone no matter what the reason..lost, stolen , broken, 8 to 16, is a new 2 year contract.
I have also read other post of people trying to swap the sim card and have the 16 gig just sit there with the connect to itunes picture.
Also take a look at this post
http://www.iphoneatlas.com/2008/02/05/16gb-iphone-upgraders-forced-to-sign-2-yea r-contract-extensions/