I dropped 20 in a Vodaphone store in Portugal for a pay-as-you-go card, and got my previous Android phone working just fine. Here in Canada (and in the US too, although for slightly cheaper), you absolutely have to have a plan, with some expensive extras for data, and if I wanted the cheaper plans, the subsidy wasn't as good (I paid $250 for my iPhone 3G instead of the advertised $200).
There's a bit more to analyze, yes, and I understand it might be an acceptable compromise. For me, since I enjoy travelling, having an unlocked phone has a significant extra value, and as a hacker, having a phone I can play with is also an extra value. Both of these might not apply, or only partially, if you do not travel as much, or are not a hacker.