Was the message from Vodafone or P4U?
If VF was there a link that may have provided a code to get the discounted handset?
If P4U i doubt it will be an upgrade, and they will sell you a new contract... so that depends if you want the pain of having to cancel your old contract and try to keep your number... or just upgrade and continue as normal.
They can offer the phone for free because they have a different cost model, will be buying in bulk to provide hand sets for all the networks, and don't have a £2.2m per day network to run and maintain.
