Here are my thoughts which may be useful (in advance of the phone prices from operators) - I've done my sums and figure:
I would like the 32Gb iPhone 4. I will be staying on O2 - you get £5/month off their very good broadband and the phone service is OK for me.
I'm on iPhone simplicity at the moment - £20/month with 600 mins/1200 texts. One option is to stay on simplicity and buy iPhone 4 as O2 payg.
The other option is contract - I would be going on an 18 month £35/month contract (only need 300 mins really), but would like the option to pay off in a year to get the next phone etc. So, assuming a £20/month buy-out.
So, if I see out the full contract for 18 months:
18 months on Simplicity would be £360
18 months on contract would be £630
Therefore, if the payg phone is less than £270 more than the subsidised contract phone, the total amount to pay would be less on Simplicity.
If I was to buy out after 12 months:
12 months on Simplicity would be £240
12 months on contract (plus £20/month buyout) would be £540
Therefore, if the payg phone is less than £300 more than the subsidised contract phone, the total amount to pay would be less on Simplicity.
Simiplicity also gives me 300 extra mins/month and the unlimited data if O2 will let me stay on the existing deal (see below)
The other things to consider are:
Can I use my existing simpilicity 'contract' with the new iPhone 4 (to get unlimited data) or will O2 force me onto their new capped data when they send me a microsim? Could I just get a sim cutter?
Is the O2 insurance (which I would be getting anyway - it's been useful before!) available on payg?