I have discovered lately that phoning o2 upgrades is pointless, as they have no ability to offer you any decent discounts. Through various phone calls with them I decided to cancel my contract, so was transferred to the retentions team. Wow, these guys could do a bit of dealing..
Firstly I noticed that if you mention a competitor website, and quote some random amount of cashback they were willing to give then the assistants are willing to give so much off the monthly bill. In the end they offered me the Sony Xperia X1, £50 for the phone on a £27 a month contract. This brings all the texts/minutes and unlimited data that the £45 a month contract offers.
The best that the upgrade department could offer was the phone for £100 and a £35 a month contract.
To make this work you must be willing to upgrade to a 18month contract, and tell upgrades that you want to cancel your contract as their prices are too high. They will put you through to retentions and they ALWAYS ask you why do you want to leave?. Say I can get this cheaper on mobiles.co.uk and they are offering £180 cashback.
I advised this to my friend and he got a £35 a month contract for £20 a month (phone for free).
Happy with your phone? The o2 simplicity gives you 150mins and 300 texts for £10, on a 30 day rolling contract! (this is what I ended up doing as I liked my k850i).
I hope this helps some people, and sorry if you dont consider this advise to be a deal, but I have taken my time to potentially save a few people some money!