IPhone 5 cotract/pay as you go?

I'm thinking of getting an iPhone 5, but I'm not sure about the contract or pay as you go. I hardly ever call anyone, and I don't text much, the maximum would be about 200 texts a month. The only thing is I really want to be able to use the Internet whenever I want. The contracts are so expensive though. I currently have a htc wildfire on Vodafone and it is pay as you go. I top up 10 pounds a month and get 500mb free data, would I be able to still get the same deal with an iPhone 5? I'm also confused about the nano sim thing, does this mean I need to get a new SIM card? How do I go about getting an iPhone 5 with a Vodafone pay as you go sim? It ideally needs to be Vodafone because not many networks cover the area I live in, I'm in the UK.

Probably better
t-mobile does a PAYG iPhone SIM - with Free (yes) 500MB internet for a year
(text from the iPhone to enable it)

and you keep your topups for making calls as well.

but yes, if you want to stay with vodafone. No problem.