I had a T630 and the joystick went on that in the last 4 months of the 12 month contract. I took it to an O2 shop to be sent for repair. Came back with a whole new fascia, keypad and joystick. I sold for £40 when I got my upgrade.
My upgrade was a K700i which the joystick's gone funny on! As well as that I managed to crack the screen. I asked in the shop how much it'd be to repair the screen, they said £70-90!! I bought a brand new screen, T6 torx driver and case removal tool for £26 from eBay and replaced it myself. I took the handset into the O2 shop on Saturday to be sent for repair. By the time I get it back I'll have my new phone, so I'm selling it!
Basically, use the 12/18 month warranty for dodgy joysticks etc. It'll keep the phone in good enough condition for the duration of your contract, then you get a brand new handset when you renew.
Despite the problems I've had with SE joysticks I'd never buy anything else, mainly due to the reason stated above.