If you are after an affordable and yet very capable Android-based smartphone, check out the Huawei Vision (otherwise known as the U8850) available on PAYG from Phones4U. The device is on sale on T-Mobile, Vodafone, O2 or Orange for £49.95 with an additional compulsory £10 top up.
Note that you can get the smartphone for £39.95 if you go instore to Phones4U and show an existing, working SIM card with some credit on it. This doesn't make the deal any less sweet, especially as Phones4U also dropped 12 months Wi-Fi as a freebie (500MB monthly usage).
The Huawei Vision sports a 1GHz Qualcomm Snapdragon MSM8255-A system-on-chip, a microSD card slot, 512MB of RAM, 1GB onboard storage, a 3.7in 800 x 480 pixel display, a 5-megapixel rear camera, Android 2.3 Gingerbread, Bluetooth, Wi-Fi, a microUSB port, Stereo FM with RDS, A-GPS, a 10mm thickness and a weight of 121g.
There aren't many smartphones that can offer so much for so little. But there are a few flaws like the lack of front facing camera, a minuscule amount of onboard storage and no plans for upgrade to Android 4.0 ICS.