Contracts don't pay, even with the lucrative Tesco Mobile iPhone 4 deal. You're still technically borrowing money and paying more back, piece by piece.
The Tesco deal I think is by far the best and would probably be the only contract I would consider signing. Even still, I would rather pay it all off at once and then have the freedom to choose my tariff.
Apple SimFree - iPhone 4 16 GB
Handset Cost: £499
Monthly Minutes: 0
Monthly Texts: 0
Internet: 0
WIFI: 0
Contract: None
TOTAL PRICE: £499
Tesco Mobile - iPhone 4 16 GB
Handset Cost: £349
Monthly Minutes: 250
Monthly Texts: Unlimited
Internet: 1GB
WIFI: Unlimited
Contract: 12 months
TOTAL PRICE: £589
So technically, you're paying £90 a year for that plan, which works out at £7.50 a month. Not bad, I guess.
However, for £10 a month or £120 a year,
with this sim free deal you get 500 minutes a month, unlimited texts, WIFI and Internet - plus an unlocked iPhone with no commitment. Well worth the extra £2.50 a month I think.