When a new iPhone comes out, can you exchange your old one for the new one for free?

Let's say I bought the iPhone 4s in 2011. The iPhone 5 comes out in 2012. Can you get the new iPhone 5 for free by simply exchanging the phone?

I was told that by 2 of my friends. I told them that's stupid because there's no way apple would be making money. My first friend (who is more reasonable), said that he thought you got the next one free after your contract is up. I said there's no way, you'd have to pay the extra $300. He has an iPhone 4s and I've got the iPhone 3GS. If you could've exchanged it, I would've known and switched my phone out instantly. Now my other friend was less open minded. He said "If you play your cards right, you can get the new iPhone simply by exchanging your phone". What cards can you play? No phone company in their right mind would give you a free $300 phone without getting a new contract. This kid doesn't even have an iPhone so I don't see how he would know. So now, I'm asking Yahoo Answers to see if that myth is true.

Just simply ask your phone company.
Most of the time you will be able to replace it.

Actually you exchange it and you get SOME money back. Also Apple makes ALOT of money on each iPhone. I believe a unmarked iPhone is sold at $1, 000 for 8GB (it is legit).

Also phone company barley make money off iPhones. Sprint PCS maybe makes around $75 off each Iphones.

Open link 2 & 3 on

Why would you argue with your friends or post this question here when you could have just gone to the web sites of cell carriers and you would have seen for yourself what they're offering for old phones.