That is correct for any product launched since the S1/S2 split.  All such products can be used only on S2, and the gen 1 P:5 can be used only on S1.  There are products in the current range that can be used on S1, and so you could expand and keep the gen 1 P:5 in the system.

But I would not recommend going down that route as it’s not very future proof.  It may depend on how many gen 1 P:5s you have, but I suggest you use the upgrade credit to get new speakers.  The Five is hugely better than the gen 1 P:5.

You may be able to get the discount on some speaker bundles, not just single speakers (I am not sure what the current terms are.  You can do what you like with the gen 1 P:5 - sell it, give it away, recycle it, keep it as a standalone speaker….

https://support.sonos.com/en-us/article/sonos-s2-compatibility

Thanks for the speedy reply, yes I think a speaker bundle is the way forward. 
much appreciated