I do find it interesting how many people think their phone will stop working when the contract period is up.
Don't get me wrong, I'm not saying you're stupid or anything it's just that the networks never seem to explain this anywhere.
Basically as was said, your contract period is simply the time you HAVE to stay with that network. Once it's up everything carries on as normal except you are then free to change at any time.
As was also said it gives you some bargaining power too. Since the network no longer has a hold over you they tend to offer better deals to keep you on. See what deals you can get.