Is there something cheaper or better than Movistar?  I'm not bothered about SMS - just local calls

There are many altenatives to movistar and vodafone. Take a look at http://www.hitsmobile.es, it is in English, calls the same price whether to mobiles or main line phones plus cheap to UK. No contracts plus you can transfer your existing phone number.

If you want internet as well as calls try http:www.masmovile.es

Also they all seem to offer free calls between Hits chips except for the initial connection charge which I think is about 0.15cents like all companies.

We transferred to Hits as they use the vodafone network, most of the others use the orange network.