The Spanish love to talk and mobile phones are now part of day-to-day life as in most other European countries.
These are the 4 main providers with their own network:
Spain operates on a GSM network. For Europeans and many other countries, this means that your current phone will probably work in Spain. If you are coming from North America or parts of Asia you will probably have a CDMA phone, which will not work. If you have a GSM phone, you need to check whether your phone is unlocked - some phones are locked in to the network you already have - if it is unlocked you just need a Spanish SIM card.
Prices on new phones differ greatly depending on the retailer and the mobile operator. While each operator has its own retail outlets, prices tend to be better elsewhere. Large retailers like Carrefour offer relatively good deals. For Vodafone and Orange phones in particular, The Phone House chain is very competitive.
Over the last few years many low-cost chains like Happy Móvil, Lebara and Simyo have entered the mobile phone market to compete with the four main providers mentioned above. Furthermore many supermarkets offer mobile phone tariffs as e.g. Día Móvil, Eroski Móvil or Carrefour Móvil. Prices and services vary from company to company. Most providers offer tariffs including internet access.
The Phone House has conveniently compiled the rates of all the operators in one place. Pick up a copy of their brochure (the rates are in the back) in one of their stores or have a look at this brochure (only in Spanish).