http://www.phonearena.com/htmls/Sprint-raising-regulatory-fees-as-soon-as-the-new-year-arrives-article-a_8492.html

"Starting January 1, 2010, Sprint plans on increasing monthly regulatory fees from $.20 to $.40 – it’s that one line on the bill that mostly everyone wonders about and forgets.

This act may be the ripe opportunity to get out without paying the ETF because it can be considered as a “materially adverse change of contract.” If you’re content with Sprint, you can also call up their customer service line and request to convert to a month-to-month plan – so at least that contractual commitment is off your hands. Finally, you have until the end of the month on January 31, 2010 to cancel your line. "

If you want a way out of contract with sprint now is the time to do it. Maybe a new DROID.....

So can i cancel my current contract and then resign up and receive new phones with a new contract discount?

More than likely, you will not be able to get your contract to a month-to-month agreement. You either cancel because of these new terms, or you don't. Sprint has no legal obligation to convert you to a month-to-month.