@Chris

You mention that O2 have given a price for the PAYG iPhone - during the keynote Steve Jobs stated that the price of the 3G iPhone would be a maximum of $199 worldwide.

I'm very interested to see what actual price O2 do end up quoting for PAYG because I'm sure it will conflict with what Steve has said. I actually believe O2 didn't have a clue that Steve was going to say that about the worldwide maximum price and In light of this I won't be surprised if O2/Carphone Warehouse withdraw from offering the iPhone on PAYG

You need to wake up. Both the iPhone and the iPod have been out for over a year and have wi-fi.