I totally agree with cliffrose on how to transition to milk. That's how we did it in our house, and it worked GREAT!

As for the bottles - once the milk transition is complete, you could try a Nuby sippy cup - they have soft or hard spouts, and we had no trouble transitioning to the soft spout -a lot like a bottle still, then we transitioned to the hard spout. They're less than a dollar each.
Or, you could go cold turkey, and put it straight into a normal cup or sippy cup.
Another thing you could do is to water down the milk bottles until he "gives them up", all the while offering milk in a cup.
But - I would do the transition to milk first, before you do anything about the cup.