cant say how it will work in europe on O2 but in US its all done through iTunes u never physically sign anything. At least thats how i did it but i was an existing AT&T customer. It worked out great just added $20 to the contract i already had for the unlimited internet and 200 sms
The iPhone is locked to the o2 network. When you buy/order the phone you just simply pay the £269 for the phone and when you get home you active it through iTunes. Its very very simple. P.S the iPhone has to be sold with a £7 a month insurance, although you can cancel this at any time.