Today Steve Jobs is expected to unveil the 3G iPhone at the WWDC 08.
Rumors have already appeared that the 3G iPhone will be subsidized and therefore much cheaper than the original iPhone.
The Daily Telegraph now cites sources that O2 is going to even offer the 3G iPhone for free, if you choose a premium tariff that would run for about £75 a month.
Additionally the new iPhone could also be offered on a pay-as-you-go basis.
The new iPhone is expected to ship in the UK next month.
More details on The Daily Telegraph. More 3G iPhone Rumors.