Thanks for the follow-up. I've done more in-depth exploration into the issue and I can confirm with you and anyone else that Apple has not and will NOT allow us to turn off that upgrade icon. It stays with our iphone forever. But there is one thing to stop the system from secretly upgrading (which I believe but some people don't).
If your phone asks some day that the upgrade will happen tonight and ask your approval, never hit YES; However, if you inadvertently hit it or do not know what's going on, and the phone ends up downloading the upgrade file by itself and asks you again that that upgrade will happen in xxx hours, now you feel screwed and it is the end of the world. But, there is a way to remove that annoying 'Your system update is ready." Here is how:
Get to Settings-General-iphone storage, look for "sysem update" (not sure of the exact wording but you know what I mean), it should be a file of around 1 gigabyte. Remove it immediately.
Then Apple won't nag you about the upgrade by a prompt dialog. But you will see see the red circled digit 1 icon.
That's how I get rid of the upgrade prompt.
Hope this helps.