When I upgraded from an iPhone 4 to an S3, my wife wanted my iPhone. Verizon was happy with that, and transferred her phone number and her billing to the iPhone. I think that they were especially happy since they were able to switch us both from unlimited data plan to 2GB data plans. They love to do that, and will use any opportunity to do so.
On the screen size, I suggest that your wife handle a bunch of phones with different screen sizes, at the Verizon store and also handle and use her friend's phones...if I were upgrading now, I might go to a Note 2 instead of S3 myself. But the Note seemed really large when I got the S3 (and the S3 was a lot larger than the iPhone 4 *smile*). It may be that she has to own and use a phone a bunch before she knows what size suits her best, but there are several different sizes to choose from as you know. I guess my point is that what she thinks she wants before she has a phone may differ from what she wants after a little while. As Verizon extends the upgrade period, and they just extended it by 4 months, it's more important to make a good decision up front. You'll be living with that phone as a bunch of newer phones come out, so picking a phone that you feel good about and will serve your needs means more.