This is tricky due to section 3.3.3 of the license agreement and Attachment 2. I'm not a lawyer so I'll save my interpretation but, read them.
Another option would be to make the free version a new, different app and leave the original one in the store but unavailable. Then you can still publish updates to it but new users won't see it. Apple would probably allow this considering you are still only presenting one app to new users. The downsides are (1) you have to maintain two versions and (2) you have to start over in terms of reviews etc.