I was going to buy an iphone 3g not s when I heard that they will be sold much cheaper but seeing o2's prices I'm just going to get a ipod touch, I don't use the phone much anyway, and I don't have to pay 02's extortionist prices.

Get the 32gb iPod Touch. You will have plenty more space for music/apps/games. I wouldn't be as anxious for the 3G [s] if my 16gb iPhone had 32gb of space..

Thanks, I'm actually going to hold on a little while as I think Apple will update the touch soon. See here also:
http://buyersguide.macrumors.com/