What I can't really comprehend is the reasoning behind the pricing of the iPhone vs the iPod Touch. 32GB Touch - £283. PAYG iPhone 3GS 32GB - £538. Does it really cost £250 to put a GSM/3G chip in there? I would argue that at MOST, the difference should be about £20. In manufacturing terms, it's probably bugger all.
Note I don't think I'm "entitled" to get out of my current O2 contract and get a 3GS without paying through the nose.
O2 are being rather disingenuous at the moment though. Their current iPhone page gives "upgrade" options to existing iPhone 3G customers - install the firmware next week, implying perhaps that this will magically turn it into a 3GS! :-)