neither - you need to download the giffgaffapn app from the android marketplace:
https://market.android.com/details?id=com.paulshirley.android.giffgaffsetapn&feature=search_result
do this via wifi, and it will set your phone up correctly for internet.
u can choose O2 prepay. but yr internet will not work coz its going to add the O2 settings. u need GiffGaff settings
http://bit.ly/giffgaffandroid - Android - Or download the Giffgaff APN from the android market
you need pre pay but it actually dosent matter at all