When I was living in Spain I bought a phone from Airtel, which is now Vodafone. I spent about $50-$60 dollars on the phone and it came with minutes already on it. Then I just paid as I went and put minutes on it as needed. You buy a card of minutes and on the back it gives you instructions on how to activate the minutes. I always bought the minutes at Corte Ingles and the sales clerk, knowing I was foreign, would call and activate it for me. No inserting of any additional cards, just activating minutes that you purchase.
Any incoming calls were free anytime, anywhere, as were the text messages from my Spanish friends. Sending the text messages in Spain was pretty cheap. I imagine you can still find this today. This was the cheapest way for me since I was just using it to receive calls and send and receive text messages. I wonder when the US will catch up in cell phones…?
As for using the cell phone in other countries, I used it to receive calls in Western Europe (free of charge!), but I didn’t make any phone calls because I didn’t want to take any chances on fees. Oh, and I didn’t have to change the card to use the phone in the different countries. However, if you want to be able to use the same phone in the US, it has to be “tri-banda” or tri-band in English, or else it won’t work here.
Here is the vodafone website:
http://www.vodafone.es/Vodafone/HomeVodafone ¡Suerte!