If you would read any of the advertisements, it clearly states tthat the pricing is for out of contract lines. For the lines that are out of contract you get a $!5 to $25 discount per line.
AT&T is no longer subsidizing phone purchases. One way or another, you will pay for the phone, thus the reason for the lower pricing.
You have several choices in upgrading. You can do NEXT, in which you keep your discount, but pay for the phone in installments over 18-26 months. You can get a subsidized upgrade, but then lose the discount for the length of the contract, or you can pay full price for phone up front.
With the new pricing, those are your options.