Oh dear... contracting (UK)

my company’s been making redundancies, and I am one of the many to go. Its a real shame because I really enjoyed the work, making games, it was varied, challenging and at times cutting edge. But theres no point dwelling on it.

I undercut myself considerably going into this role, and now I consider myself to be well accomplished/experienced as a flash developer I thought its about time I try for a decent wage from it. In a word, contracting.

So I’m really asking for existing contractors insights into making such a decision. How hard is it to set up, how likely are you to be screwed over by a company, what pitfalls are there and how to avoid. Just a general (flash) contracting discussion

thanks