Hi Nizzle - Spain is a very big country and you will need to think firstly about what kind of area you want to live in - beach, inland, town, country, etc. Then I would recommend a holiday before even committing to a rental contract. When you are ready to move out, you will find lots of choice in most of the areas popular with Brits, both for rent and to buy.
Purchase prices have fallen up to 50% in some areas and this has had a knock-on effect on rentals. In this area (Costa Blanca south) I don't think we will see much more in the way of reductions in prices, but I'm afraid I don't have that crystal ball you asked about!
You will see lots of posts here about different areas and there are community forums for particular developments too, when you begin to narrow it down a bit. That should help.
You don't say if you need to work or not, but be aware that it is very difficult to earn a living here at the moment - most jobs are commission-only sales jobs and times are hard. Make sure you have enough money to last a couple of years before you take the plunge, unless you have a guarantee of work here.
Whatever you decide, I hope it goes well. Do keep us posted with your progress!