I'd suggest not telling her and make her more defensive about her phone. Or maybe offer her an Android instead of an iPhone. ;D I much prefer Android over iPhones.
Honestly though, why does she need to upgrade if she likes her phone? Just wait 'til it breaks and then she'll buy a new one. It's her loss if she has a phone worse than what she could have. Then again, a new phone costs money so maybe it's to her benefit to stick with the phone while it's still working.