On PAYG in the UK, the 8GB iPhone costs £342.50 and the 16GB costs £391.45 and o2 give free unlimited data and WiFi access for the first 12 months.
The PAYG tariffs are quite complicated but basically if you top up £10 a month you get 300 free texts, £15 a month gets you 500 free texts and £30 a month gets you unlimited free texts. All of these options give you the texts in addition to the amount you top up. Then their are tariffs that if you top up £15 you get free unlimited texts and calls to anyone on o2, etc.
Their cheapest tariff where you get the iPhone for free costs £45 a month and you get 1200 minutes and 500 texts, which is ok if you talk alot, but I tend to text far more so the £30 PAYG option is actually better for me.
I'm currently on the unlimited texts and calls to o2 numbers but this month alone I've topped up around £80 due to all my friends switching to other networks...damn people