I always buy mine outright. Then you can upgrade the phone every year when the new one comes out, and get a good price for your 12 month old one. If you take out Apple Care you can even send it back when you've bought your new one, claiming the wifi drops out or something that's covered under the manufacturers warranty, and get a brand new one to sell on. Get a bit more then.
Then it costs me £10 per month for 'unlimited' 3G, and I get texts and calls I've never used since I've had it first time 2 and a half years ago. So it costs me £120 per year for all the gubbins. And I sell the old phone for £100 less than I bought it for. So £220 per annum and I upgrade every year guaranteed.
Doesn't make sense to get a contract IMO.
Then it costs me £10 per month for 'unlimited' 3G, and I get texts and calls I've never used since I've had it first time 2 and a half years ago. So it costs me £120 per year for all the gubbins. And I sell the old phone for £100 less than I bought it for. So £220 per annum and I upgrade every year guaranteed.
Doesn't make sense to get a contract IMO.