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02 offering free upgrades for select plans.

While yesterday’s announcement of a drastic price reduction for the 3G iPhone, may seem to be a great deal at $199 for the 8GB model, its certainly hard to beat “free.” People of the UK May have something to smile about today as O2 has confirmed that it will offer its customers a free, thats right, free 8GB or 16GB with some select plans.

MacNN reports that with the two most expensive plans, “a new £45 per month contract nets the 8GB iPhone for free, or the 16GB model for £59; a £75 per month contract delivers the 16GB version for free. The plans offer 1,200 minutes and 500 texts or 3,000 minutes and 500 texts, respectively.”

Current UK iPhone users that are already spending £45 on their service plan, will be eligible for the free upgrade upon release of the 3G on July 11. Subscribers paying currently £75 will be eligible for the 16GB upgrade, yet anything less than these two plans will require an initial purchase of the iPhone.

O2 is also offering up a pay & go phone plan to their customers, a feature that AT&T has already shot down, yet details will not be released until early July.

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