With the lauch of iPhone 4, O2 have some of the 3G(S) models available on refurb in both black and white. You can get these by calling O2 customer care or retentions. Whereas the 'new' handsets are fixed at a certain cost by Apple, you can get the refurbished ones much cheaper. Usually they are brand new (just in a clear box rather than the Apple one!)
I just got a free handset, 300 mins, unlimited text & internet for £23pm through O2 upgrades - only downside is it is on a 24 month contract. Alternatively, the 18 month contract is £28pm.
I know many will be after the iPhone 4, but this is the cheapest I have seen the 3G(S) model so hopefully it interests someone!! Online, you would pay £149 for the handset and £30pm for the contract - a saving of £317!!
For those interested, they also have 8gb 3G models on 18mth contracts, same tariff, for £18pm. I was on a 30 day rolling contract with 02 and got this deal, so maybe it is available to PAYG customers too?
NOTE: First posting and its cold!!?! It seems a great deal to me.