In response to the OP's question: A quote from Disney's website....
"This ticket may be upgraded to any Annual Passport so long as such upgrade occurs on or before the last valid day of ticket usage..... And for just $35 more, you can upgrade your Summer Fun Pass to an Annual Pass!"
As for the question about the Deluxe Pass.....
Once you buy the pass (whether in one lump sum or in monthly payments) then you take the ticket that they give you as well as the mini-contract that they have you sign, to the new Passholder Center at Plaza Pavillions on Main Street (no longer the bank)
They will then take those two documents and take you picture, and in about 3 min they will hand you your new Pass!!
the whole last day thing is a bit of a deal sometimes... i know people who have visited and gone to disneyland with me, and wanted a one day one park but because it was the same price got a 2-fer... and then i ended up with a 2-fer ticket with the DCA day still on it, that was good for the next 30 days and could be put to an annual pass! O course they're technically not transferable, but the regular old tickets don't have a person's name on them so sometimes it works out that way.
"And all I ask is a tall ship and a star to steer her by" (John Masefield)