I think I'm gonna switch when my iPhone contract expires unless O2 tariffs are compelling because I'm v disappointed with the O2 3G coverage. Orange is already reckoned to be better and if they join with T-Mobile it'll presumably be better still.

Their fair use policy is 1.5GB/month (I've seen one of their internal memos on the subject ;) )

...and "unlimited" 3G and WiFi data they are a sharp drop from the plans at the Iphone launch.

Shouldn't WiFi be unlimited anyway since O2 can't control whatever access point you happen to be using.
They can only monitor how much data you're transfering when you're using their Cell network.

"For the measly sum of £2 per day you can use your Iphone as a modem."

But why shouldn't you just be able to use it as a modem anyway?
Isn't it just a matter of setting the appropriate settings on Iphone/laptop/netbook and connecting via BlueTooth or the USB cable?

@Steve T

Jason Ravek is correct. Up until today the "Simplicity 20 for iPhone" which 02 were offering under the counter to people going off contract basically offered exactly the same benefits as the 35 quid iphone tariff, plus a bunch more free texts for twenty quid. It was different from the standard Simplicity package and for former iPhone users only.

.. because I switched over to O2's Simplicity 20 for iPhone only last week (Tuesday or Wednesday) and got 600 minutes, 1200 texts, plus the 'unlimited' data for iPhone, and the Visual voicemail and Wifi Roaming (to The Cloud and BT) still work.

A data-less contract for an iPhone?

Isn't that a bit like choosing to buy alcohol free beer?

Or are their really that many iPhone owners who have no friends and spend their lives within range of their home wifi?

Actually, I think I just answered my own question... Forget I mentioned anything. :o)

You're comparing apples and oranges. Your £20 Simplicity plan (assuming you've included the data bolt on as your free choice) has a 200MB data cap, no WiFi access and no visual voice mail. Cheaper Simplicity plans didn't allow you to include data as your free bolt-on, so the cheapest option was £10 for 100 minutes, plus £7.50 for 200MB. £17.50 for 100 minutes and 200MB of data vs £20 for 300 minutes, unlimited data and WiFi, and visual voicemail thrown in doesn't seem like a bad deal to me.

Until today, O2 did a SIMplicity tariff of 600 mins, 1,200 texts and a free unlimited web bolt on for £20 a month on a 30-day rolling contract. That's now £25. For £20 you get only 300 mins now. So this is actually a WORSE deal (and not competitive with T-mobile, you do a £20 Solo with unlimited web and unlimited texts plus 600 mins). On this evidence, O2 seem to want iphone customers to switch!