PAYG iPhone doesn't seem that bad an idea ... I mean, for people who just always wanted an iphone but would never use the internet or to use the maps to find places etc ... all they wanted was the apple interface, visual voicemail, new sms style etc
plus the fact that you can still use wifi means you can still use some of the iPhones features without running up a huge bill. Tbh its more like an ipod touch with limited phone abilities

that was my stance a good few months back, but things change