Unless you are willing to sign a 2yr contract, you will not be able to get a free iPhone 4.

You are correct that you can get a free iPhone 4 by signing a new 2yr contract when you become eligible for a discounted upgrade.

If you add your wife to your account and sign a new 2yr contract for her line, you would also be able to get a free iPhone 4 for her. If you are unwilling to sign a 2yr contract for her line, you would have to pay full price for her phone. However, you could try eBay or Swappa.com for a used phone which you could then activate on a new line of service without signing a new 2yr contract.