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I have a ZTE blade, that I have rooted and put android 2.2 on. Works pretty well and I picked it up for £89.99.
I use giffgaff for my service provider, which as far as I know is the cheapest out there.
8p/min to mobiles
4p/miin landlines
Data is currently free until end of March @ 100mb/day. After that they will introduce charges.
Although if you buy a goodybag for £10+ per month you will get unlimited and I mean UNLIMITED web usage. There are no fair usage policies on this network. Also with £10+ goodybag you will get inclusive minutes depending how much you spend and also UNLIMITED texts.
obv you can xfer your existing number
also they offer what is called payback, meaning if you contribute on their forums you will get money back bi-annually. Last year between July-Dec I got £50 for a few hours on the forums and signing a few ppl up. more than I spent topping up.
sorry to spam check it out anyway, simple google search. 
hit me up if youd be interested to join I can get you a SIM with bonus credit,
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