I've got a friend coming over from Austria for a month and I'm looking for a cheap way for her to make and take calls.

I've got a spare (old) mobile but I'm also willing to spend a little on a new one.

Or is there a landline service that would be better?

I wouldnt go to the bother of buying a new phone. Just buy (or get free) a cheap SIM from one of the virtual networks, Virgin, Tesco, which ever is the cheapest on your friends usage and shove it in the old mobile.