The up and coming and highly desirable 3G iPhone could be available for free through O2, UK’s premier service provider. The company, upon noticing the massive sales after the £100 price cut on the 8GB model, has decided that if they offer a free iPhone they may see even more people coming aboard. The deal will only be offered through AT&T outlets and not directly through the Apple store. Although many iPhone users are still locked into their 18 to 24 month contracts, O2 may find it a bit difficult to encourage new users to sign up. The two companies may offer an upgrade to appease those who fill still feel cheated after supporting the iPhone from the beginning.

Vodafone UK has announced a number of plans tailored to unlimited data usage for £5. The actual cap is 500 MB per month so unlimited may be a bit of an overstatement. Typically UK iPhone customers pay from $30 to $70 for 3 GB of data with a two year contract or $40 to $80 for those who do not want that two year contract. Customers are also offered insurance for $10 each month, just in case they go over their monthly allowance.