Just to let you know the new 3g iPhone is released on 11th July and will be better by far. It's £99 on a £35 a month contract and there has been some mention about it being pay as you go, though this may be for businesses only. Might want to hold your horses a bit.
Don't do it, iPhone is all bells and whistles but it's not very good at actually being a usable phone and o2 is pricey when it comes to using flashy features.
If you want a phone with a good quality Mp3 player then go Sony.
If you want a phone and decent camera go nokia N95.
Infact the N95 is better than the iPhone in virtually everyway except its a bit chunkier.
i might be tempted to shift mine but its gonna be more than £150 as its in perfect condition and was bought only 2 months ago (has been kept in a hard case and screen protector since then.)