According to Apple's return policy, you can't return an iPhone to Apple Store if you bought it online from apple.com. What the woman above did was, called Apple, told them she wanted to return the phone. They gave her an RA# and Fedex# and sent the phone off. Apple called AT&T to tell them the phone was being returned and to cancel the upgrade. The girl then called AT&T and gave them the Fedex tracking # and RMA # as confirmation that she'd mailed the phone. AT&T canceled her upgrade and she got a new phone the same day. In your case, you would just call AT&T, give them the proof that you mailed the phone back to Apple and ask them to cancel your upgrade.
If you upgraded less than 30 days ago, then your new contract would be canceled and it would revert back to your original contract. In some cases, AT&T only allows cancellation of your new contract within 14 days in order to avoid cancellation fees. I know at Costco, it's 30. I think your best bet is to discuss this with AT&T after you send your phone back to Apple.