Check out Mobal.com... they have a phone that works in many different countries without changing the Sim card. I have the $50 one, it works in all of Europe. The $99 one works in more countries. You only pay for the minutes you use.
The call rates are high... in Italy it was $1.50 a minute... but when I checked on call rates from my cell carrier, they were about $1 per minute, which is still cost prohibitive for talking on the phone for any length of time, and I would have had to buy a new phone for a couple hundred dollars.
It has text messaging, and that's probably the cheapest way to communicate to someone else's phone, 80 cents to send one and free to receive.
I have used the phone in Italy, Netherlands, and Germany, and only once had it not work, which I still can't figure out. I was trying to call a hotel that was less than a mile away, and it said something about it not being on that network or something.
The one thing I don't like about this phone is that it doesn't have a keylock as far as I can tell. So, when it's in your bag banging around, the numbers get punched and you may accientally end up calling someone.