I can whole-heartedly recommend giffgaff.
I too was thinking "where's the catch?" but I've been with them for a few months now and everything works as it should.
There's even a nice little app on the market that adds in the relevant APNs and lets you check your balances etc.
If you're planning on trying them out, you can order a SIM through my account and we both get a free £5 credit.
Also, their forums are extremely good for getting specific questions answered.