iphone warranty on my 3G lasts the same as the o2 contract I have...thats the reason I don't pay insurance anymore (£10 a month for me)...
Mine wasn't (on O2 as well), you get a 12month warranty on the phone itself and O2 try to flog you £15 a month insurance to cover it. After 12 months they refer you to Apple if you've got any problems with the phone itself or offer you an early upgrade. Apple wanted £150 to fix the phone (no idea if that's specific to Wi-Fi or a flat rate for any problem) and having spoken to them yesterday, apple care which I beileve is basically a 2 year extended warranty, costs £60. Anecdotally a lot of Apple kit seems to mysteriously die when it's 366 days old, so I'm taking no chances this time. According to apple you can take it out anytime within the first 12 months of owning the phone.
Had mine just over a year and not even managed to scratch the screen yet, something I was convinved would happen after about 5 minutes and that's invariably putting the phone into the same pocket as my keys.
Not bothered Jailbreaking the phone, didn't see the point especially now there are viruses out and about that only affect Jailbroken phones.