Ive been contracting for 8 years and always used an umbrella company. That was until it was almost outlawed by Gordon Brown a couple of years ago. Now Ltd Co is the way to go.
There are a few companies that will set up and run a Ltd Company for you if you dont want the hassle. Beware thought there are some crooks out there. Remember the old aying 'if it looks too good to be true then it usually is'.
I use a company called Brooksons and have always been happy with them both as an Umbrella company and to run my Ltd Co. as they do now.