if you want to go SIM only, take a look at giffgaff, its on the O2 network and very good value, I use on iPhone 4 for £10 per month, 250 mins, unlimited text and data. Free calls between giffgaff users too.
If you follow this link to get your free SIM then we both benefit;
http://giffgaff.com/orders/affiliate/rhiannon_elliott