help advice needed!need a new contract, cash back schemes?

Peakma

My contract expires on 30th may.I've got to decide what to do.I don't need a new phone as i have just started using my partners spare imate jam.
a)Keep it simple,stay with O2 start a new 12 month contract get 100 mins anytime any network and 50 texts for £18 a month,plus they credit £100,so total cost for the year £118.
b) go for a cashback scheme,with the risk of messing up,and probably lots of head aches and worry!I am looking at this http://www.themobileoutlet.co.uk/handset.asp?txtMode=3&txtHandset=385&txtNetwork=2&txtTariff=123
through quidco(£30 cash back) with the intention of selling the phone on ebay for around £150.
so if all went well, that would be 450 anytime cross network minutes plus 200 texts per month. all free and around £180ish from quidco and selling the phone.

Now obviously b) seems like a better deal,unless I mess up the cash back claims.There was also something in the terms and conditions,which I'm not sure about,
"17.3 When you buy a contract/pay monthly package from us you must use the provided sim card with the provided phone. If we receive a 'non usage report' from the network that you are connected to, you will be charged the full retail price of the handset via your credit/debit card details."
Will this be a problem if I intend to keep the sim card and use my imate jam,and sell the free phone?

I'm so unsure what to do has anyone had good/bad experiences with mobile outlet cash back?
I don't actually make many calls,so I was even considering going back to pay as you go!
The thing is I like everything for free,but is it worth the potential hassle and worry over the next year,if I mess up it's £40 per month so over a year thats £480.
Any advice anyone?