iPhone upgrade time...

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In a week or so my contract will arrive at renewal time, and I'm considering changing to P&G and actually /buy/ the phone myself from Apple. I don't use it a lot (maybe 120 minutes, 100 text max) and the data is now mostly email since the rest is done on the iPad.

Had anyone done that ? If I downgrade to something around 25 quid a month it will save me a bunch over 24 months... and I can resell the 4S in some time to upgrade, again...
 
I don't understand the "pay as you go" thing. Since you have to pay every month, whats the point ? The original Pay&Go thing used to be that you bought credit, and spent them on your on time (over X months).
Now it's pay-as-you-go-as-long-as-it's-monthly. Whats the point, apart from of course making money for the cartel ?
 
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