It’s been 9 months since I bought my iPhone 3G on o2 and chose the £35 per month tariff which got me 600 inclusive minutes, 500 texts and unlimited data. As a fairly low user it came as no surprise that I wasn’t even touching the edges of this allowance each month.

With o2 in the UK, we can downgrade our tariff after 9 months. So, last week I called o2 and downgraded to the £30 per month tariff which gets me 75 inclusive minutes, 125 texts and unlimited data. As you can see there is quite a big leap in allowance between the two tariffs for the sake of £5, but it’s better off in my pocket than o2′s. I’m sure the £30 per month tariff will be more than enough, but it’s good to know that I can upgrade again at anytime if my usage increases especially since MMS uses 4 SMS messages. I think popping back up to the £35 per month tariff may come sooner than I anticipated ;)

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Which brings me neatly to the iPhone 3GS that was released today. AT&T in the USA and o2 in the UK released their pricing and eligibility for upgrade details shortly after the Apple event at WWDC last week. Unlike July 2008 when existing iPhone 1st gen customers could upgrade to the iPhone 3G by simply signing another new 18 month contract, customers must now wait until their current contract expires before being eligible for an upgrade, or they can pay up their existing contract and then sign a new contract for the iPhone 3GS.

As the features of the iPhone 3GS were being announced at the Apple event, the improved 3MP camera and video was something I was very pleased to hear. However, since my current contract doesn’t end until March 2010 then I don’t have the eligibility to upgrade right now. However, o2 have outlined ways of getting the new device, one of which would be to pay the remainder of your monthly line rental in one payment and sign a new Pay Monthly contract. Not an attractive option for me with 9 months left, but also signing a new 18 month contract means when the next new iPhone is released next June I wouldn’t be eligible for that one, which is bound to carry even more new great features than the 3GS, plus a new design I’m betting.

The other alternative is to buy the PAYG iPhone 3GS 16GB for £440, pop in my existing pay monthly SIM and then sell my 3G. That means I own the phone outright and my contract ends next March as usual, leaving me free to get the new iPhone in Summer 2010 (and sell the 3GS). This is a far more attractive offer and very many of my online friends have opted for this so they can have the latest and greatest device today. This is the route I would likely take, should I decide to get the 3GS.

Have you bought the new iPhone 3GS today? Are you going to buy yourself out of your contract? Wait until your 18 month contract has expired? Or like me are you considering the PAYG iPhone + your existing SIM?