Pretty fair pricing that is, a lot of factors go into pricing but a Quarter Rack with 2A is generally around £200-240 excl VAT from a few providers I can think of if you're north of the M25 for another idea on cost.
You don't even need to attend a data a datacentre yourself to operate co-lo so no reason to consider a DC slightly further away from home if starting on a budget and a few extra ms of latency from London doesn't matter for your project. Most will happily receive + rack servers for no additional charge under your monthly remote hands allowance.
Decent latency back to London as well:
3ms - I think I can deal with that DC is up near Northampton. As you said it's a colo so as long as the bandwidth/latency is there it doesn't really matter where it is. The DC I am with charge default remote hands charges but don't care if I go way over and don't charge me more. Probably because of the relationship etc but as you say they will rack up a server for you no issues.
Also the head thing is because I sent the DC a message this morning asking them to cover some bits for me as I came back from a 3 day wedding bender in France last night and couldn't remember where I had put some documentation.
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