Rog,
Save yourself £ 200.
The .mobi suffix was going to be the next best thing but has largely been superceded by a file on your own site rather than a separate .mobi site (a m.file on your server).
This recognises a mobile call and either presents a mobile optimised stylesheet (to fit the mobile screen) for the existing site or redirects via the m.file to a separate hosting account where a "proper" mobile site is held. Google is aware of this redirect and will not think you are up to anything naughty by immediately redirecting incoming traffic.
I prefer this second approach as you can build in lots more features such as "press to call" or "press to email" buttons (especially for large thumbs). The cost of this approach is similar to what you have been quoted as the site is hosted by a third party (who run the software). This sort of site also automatically updates when the main site is changed (ideal for say special offers or restaurants changing their menus). I must get out and sell some of these

If you want a simple cheap (free) mobile site, you can if you have a wordpress based site. You simply install a free plug in which presents a mobile version according to which device is used to contact you. It's about five minute's work.
Not as good as the third party m. sort (which cost about £ 70.00 a year) but at zero cost, a very good option.
I hope that helps.
Garry