Contract makes sense £27 a month over 24 months £648 + £50 phone.
Or £500 handset, £10month(maybe more) x 24 months = £740
Also can't afford £500 upfront!
Only if you're going to be keeping the phone for 24 months.
Lets say £15 a month for a sim only deal then £6 for insurance works out at £752 over 12months, after 12 months you're gonna get about £150 back for the handset (cex, mazuma etc) at which point it's better than the contract. Like you say, if you've not got £500 for the phone upfront then you've no choice.