Can this way work so I can keep my unlimited data and get the iPhone 5?

I have 5 phones in the plan 3 are dumb and 2 are smartphones one is my line an iphone4 (unlimited data) and my moms phone.

So for this to work
I use my upgrade and move it to one of the dumb phones to get the iPhone 5 and get the cheapest data plan

then have the line service swaped back to the old phone cancel the data and service swap my iphone 4 with the 5? Am I correct in the process?

I didn't really understand but I will try to answer. If there are five phone on a plan and one cancels you will still have the thing just paying a little bit less. If you change any data thing on your phone it's gone. Lone gone. You can get another phone but the company's will try to trick you to get you out off the unlimited data. Like FaceTime on 3G. DON'T DO IT! It will take your unlimited data away and put you on 3gb plan or what ever your carrier is. Hope this helps.