If you read your contract it does state that your only really paying for the service plan, in most cases you will find that the phone was given to you as an incentive to take on the contract for a minimum term, 2 years in your case.

Phones 4 U offer cashback when you take out a new contract with them which you could use to pay your old bill off with, failing that why not drop your current tarriff down to the minimum possible price plan and then send your phone off to Mazuma (£112) or the like, you can then cancel the contract and pay it off that way.

Big-Dan.