Should I use plywood or T&G OSB for subfloor in new addition I am
building? The addition is on second story, floors are 2 X 8 16 O.C. I
checked prices and 3/4" T&G OSB is more than twice cheaper then 3/4"
plywood.

This is what they used to do our latest home.

http://www.gp.com/build/product.aspx?pid=5844

I'd use it again without hesitation. Liquid nails AND screwed to the joists