I studied in Madrid for 6 weeks this summer and bought a movil the day I got there, 5000 ptas for the phone and 5000 more in prepaid airtime. It was very convenient for me to receive calls from home, since it was free for me, I did not have to worry about receiving calls from the US at odd hours because of the time difference, and it didn't matter what part of Spain I was in (I traveled throughout the country on the weekends). However, it is very expensive to make calls, especially to the US, and my prepaid limit ran out very quickly. I ended up buying a recarga card for 5000 ptas about once a week because I made a lot of calls. My service was through Airtel, and they have a plan called "tiempo libre" that makes it a lot cheaper to make calls after 4pm, ask the salesperson to change the plan for you when you buy the phone. I would usually call the US on my cell and ask them to call me back, that way it was free for me to receive the call. Otherwise, for outgoing international calls, I would recommend the prepaid cards at the internet stores in Sol, you get much more time for the money than on the Telefonica cards.

Thanks for a great site, I have only been back in the states for a month and I am already trying to find a way to go back ASAP!