What worked for me and my 20 mo DD was basically this:
1. Doing a 1 to 1 ounce transition from formula to milk using only the bottle (obviously, you have passed this milestone already).
2. Introducing the sippy cup initially only in the a.m. and warming it for her and dare I admit it... flavoring it for her with a little bit of Ovaltine (she hates white milk). She gets like 40 extra calories and 5-6 g of sugar per day from the flavoring, no big deal to me b/c she gets extra vitamins.
3. Eventually, after a few weeks, offering the sippy at night and ditching the bottle for good (again, I warm and flavor the milk) and try and follow the exact routine as we did for the bottle.
Also, I agree with Mimi. The concern with bottles is that if you put them to bed with it, all the milk will pool in their mouth, causing cavities. But, if she is drinking it as quickly out of a bottle as she would a cup, what is the difference? As long as she stops the bottle by kindergarten, you should be okay