Nilax2- you will be able to do one last and final annual upgrade in April to purchase an iPhone 4 for the upgrade pricing, since your an existing customer. After that upgrades are every two years.
When you call or speak to a Verizon rep in April you have to be sure to have them speak to a supervisor to clarify, if the original rep says no.
I upgraded my phone annually for years with upgrade pricing and did this exact thing.
As for the original post, sure you can buy a phone every year for full retail price, I currently have the iPhone 4, and if I find the iPhone 5 irresistible then I will sell my iPhone 4 for approx. $300, I bet Verizon gives us current iPhone 4 owners a discount for purchasing iPhone 5 (I understand even ATT gives discount), let's say a discount of $150, now I purchase the new iPhone 5 for $650 - $450 = total out of pocket cost $200 with a $20 charge from Verizon to add the new phone. Worst case senario Verizon doesn't give a discount which I find hard to believe and it cost you $350 to have the latest iPhone.
Damn, wish I would have known that before, they told me no. Oh well.