Carphone Warehouse sells the Nexus S on three different mobile phone networks and O2 is the only one that allows you to downgrade your tariff after completing half your contract period.
The cheapest 18-months O2 package is available for £30, that's 300 minutes anytime any network, unlimited texts and 500MB data on their smartphone tariff while extending the package to 24 months will up the inclusive minutes to 600.
You should, in theory, be able to downgrade from 300 minutes to 100 minutes on the 18-month contract (or 600 minutes to 300 minutes on the 24-month contract), half way into your contract, for £5 less per month.
This means a monthly saving of £2.50 on average over the period of your contract and a total cost of ownership of only £495 for the cheapest 18-month contract.
Put it otherwise, the phone costs £430 at Carphone Warehouse SIM Free. Add another £65 and you get 500MB plus unlimited texts every month for 18 months; that's less than £11 per quarter.
Note that although Carphone Warehouse doesn't include the data allowance on its website, we have written confirmation from O2 that users will indeed get at least 500MB data with their handsets.