So you can buy the iphone in the US and then get O2 to reconfigure for PAYG? Given that I'd love to have the phone when I get to the UK (makes searching for flats easier), this seems like the cheapest and perhaps only way to go without waiting for a credit history
You can't buy a phone in the US without singing a contract with AT&T. They will not let you out of the store without activating it. And then you'll have more headaches than it's worth to try to get out of the contract when you move.
Furthermore, the mystical $99-$199 price people keep mentioning is for the subsidized phone, meaning, AT&T covers part of the cost as an incentive for you to sign the contract with them. They never allowed the unsubsidised ones to be sold, but for a while when they were talking about it, the prices floated were around $700+
That's not a typo.
You can choose to sign the contract, buy the phone and then pay the additional $175 early termination fee to own the phone outright, but there's no guarantee they might not make you return the phone anyway or charge you additional money for it.
http://www.wireless.att.com/cell-phone-service/legal/return-policy.jspETA: You can't buy a NEW phone without signing a contract. I think the first generation ones should be going out of contract either around now or soon, so those will be available on the resale market.