Definitely check out Martin Lewis site as he keeps updates on the best current sim deals. You really shouldn't be paying more than £5 per month for a contract these days. First time smart phones I would think something like a Nokia one. For a starter smart phone you shouldn't need to pay more than £100. It looks like the Nokia is about £70. Buying on line is riskier if you need to return. I would suggest buying from John Lewis, easy return and back up service plus an additional year guarantee.
To think that London, or anywhere else for that matter, does not belong to any one demographic