TECH: iPhone 3G - PAYG, how much?

Perhaps the most interesting development for the new iPhone 3G is the ability to purchase it on a Pay As You Go contract from O2 (UK only).
However, how much does O2 intend to charge for the device? Given the original iPhone started out at £269 with a hefty 18 month contract and ultimately failed to produce the desired sales, one has to wonder whether Apple/O2 have actually learnt from their previous pricing mistakes.
My take: with the new £99 price for the iPhone 3G handset on the cheapest O2 contract (a far more sensible proposition) I imagine a PAYG price of anything beyond £300 will turn out to be a serious mistake, especially given that the 8GB iPod touch, (basically an iPhone without the 'phone') currently costs £199.
I think they will pitch in at £269-£299...