As bad as Orange are sometimes, they have a 'buyback' scheme in place, as well as a freepost address to send your old and battered mobiles for recycling.
The buyback scheme basically means you get money back on your new contract or upgrade if you take in an old phone that still functions. At the moment I believe its ?100 on a new contract(!).
From there, OR send the phones off in a big blue box to somewhere called 'shields' and they're recycled or reconditioned when they arrive.