Can any body explain this Payg thing , I don't get it , and why is price difference so big?
PAYG (Pay As You Go) is a non-contract 'pay in advance' network plan where users must first top-up their SIM card with credit, prior to being able to make a call. There are no monthly charges or direct debits.
PAYG phones are usually cheaper as they are discounted by the network which they are purchased on. The difference in price is made back by the networks in the form of money spent on credit for the SIM card. Networks make a lot of profit from credit top-ups, which means they can offer the phone for a lower price.
PAYG phones are usually locked to the network which they are purchased on (e.g. If a phone is purchased through the O2 website, the phone will only accept O2 based SIM cards. SIM cards from other networks would be blocked from use without first unlocking the phone, which usually requires a small fee).
The difference with Carphone Warehouse is that the phones they offer are not locked to any specific network. If you choose a PAYG phone on the O2 network at Carphone Warehouse it will work with SIM cards from any network, not just O2 based networks. This effectively means that there is absolutely no difference between phones sold as PAYG or SIM FREE apart from the cost of the phone.
Carphone Warehouse also offer a way to get the phone even cheaper through their Pay As You Go Upgrade plan. You can get a further discount on the original PAYG price if you already have a PAYG SIM (on O2, Orange, T-Mobile or Vodafone) which has been in use for 6 months or longer, and has been topped-up with credit at least once. Once again the phone will be unlocked for use on any network, so it's effectively the same as buying a SIM Free phone, but it doesn't cost anywhere near as much.