I spend about 50% of my time in Spain these days - so fixed contract deals either for mobiles or internet are of no interest.
For both I use simyo - Operador móvil con tarifas bajas, voz e internet.
The mobile packages are very flexible and there is no significant signing up charge - used to be 5 euro. I use a pay as you go - which unlike some, does not expire if unused for an extended period - and the pay as you go package that suits me, automatically tops up to a limit I have chosen
when the balance on the account drops to a pre-set limit - again chosen by me. The other thing I like about this company is that their charging system is very simple and you can look at what you have spent, and where, on-line. They also sell fairly cheap unlocked (simfree) phones. I happen to use my own dual sim Samsung. Dual-sim phones are not common in Europe although Acer also have one available. They are 2 a penny in Asia however - e bay and Amazon are sources of course. The only disadvantages to Simyo are:
1. Simyo runs on the Orange network (but otherwise has no other connection Orange to the best of my knowledge) - so if Orange reception is bad so is Simyo.
2. There is a connection charge for each call - though this probably applies to most other operators as well.
They also offer internet connection - you simply pay for the amount of data you send or receive. You can buy a dongle reasonably cheaply from them or there are plenty of un-locked ones on e-bay uk. You may however need a boosting antenna that plugs into the dongle if you don't normally get very good reception. Do not however expect ADSL speeds!!!! Downloading movies is likely to be expensive.
I have not looked at the market for about 12 months - so you may have to do your own research - there may well be better deals around.