I've never had a contract on any phones of mine. Im on o2 & have a pay as you go deal with them similar to a contract. I top up £10 on the 26th of every month but I have to top the phone up myself, it doesn't automatically come out of my account. They take the £10 & replace it with unlimited texts & 100 free calling mins.
I'm happy with this cause then once the mins are gone then I don't go over. Loads of people I know have a contract phone but I just see it as another bill to pay without knowing if that bill is the same each month.