If you don't have any issues with 3 UK and are actively looking for a great phone, you might want to consider the Xperia X10 which is currently available from £18 per month on a two year contract.
For that price, you not only get 500 minutes, 5000 texts and 1GB data allowance but also free Skype to skype calls and Windows Live Messenger usage.
The total cost of ownership over that period is £432 whiich is a cracking deal given that the phone on itself costs £334, hence you pay only the equivalent of £98 for the SIM only contract.
The phone, which received an update to Android 2.1 (and continues to get other bugfixes and optimisations as well), has a 1GHz Qualcomm Snapdragon processor, up to eight hours battery life, 1GB onboard storage, 384MB RAM, an eight megapixel camera, AGPS, Wi-Fi, Bluetooth and more.
The icing on the cake has to be the 4-inch capacitive touchscreen which has a screen resolution of 854x480 pixels.