My first IPhone (a 3GS) DH bought off eBay. it was prepaid not contract.
DH's iPhone 4 was found in the gutter by one of the blokes he worked with when he worked for the council.
My iPhone 4S DH got me on contract with Telstra. Only pay $69 a month and that gives me $500 credit and 2gb data. He bundled it into our home wifi/landline package so I never use the data limit as in only using out home wifi connection.