See my posts above. If you are on an existing expired contract they will let you stay on it for as long as you like. If that includes unlimited data, as mine does, as well as 500 text limit and the old 4x sms for 1x mms, then they cannot change it.
Hmm, it would be handy to see that come directly from o2. Not that I'm doubting you.. for my own peace of mind.
Looks like i'll be buying a PAYG iPhone4 then....and possibly for the rest of my life!