Which iPhone deal would be better?

Should I buy an iPhone 4S on Pay As You Go and go on a GiffGaff £15 a month contract or should I get and iPhone 5 for 2 years on contract paying like £40 a month?

If you shop around you will find a better deal on contract.

For example

On O2 iPhone 5 36£ a month unlimited calls text and 1gb data.

You need to compare price plans. Some phones it might say upfront payment. But there are decent and cheaper deals out there