That's just for the 8Gb version, the 16gig is £399.99!
Taken from the 02 site:
iPhone 3G is coming soon to Pay & Go
Pay & Go customers can now enjoy the iPhone 3G without a monthly contract. The new iPhone 3G 8GB for Pay & Go will be available for £349.99 and the 16GB version for £399.99.
This also includes unlimited browsing and Wi-Fi for the first 12 months after you activate your iPhone 3G*. At the end of the 12 months you can continue to receive unlimited browsing and Wi-Fi for just £10 per month. We'll notify you before the end of the 12 month period by text and you can easily unsubscribe if you choose to do so.
It will be available to buy from 16th September in O2 stores, The Carphone Warehouse and Apple stores.
http://www.o2.co.uk/iphone/paygo
