I notice that phone companies (mine is pretty pink t-mobile) only have a limited number of phones available on pay as you go. Does this mean that if I was to buy a new phone and put my existing sim card in it chances are it wouldn't work?
If the new phone is of a different network to your current SIM, you will almost certainly need to get the new phone 'unlocked'. This process (which costs no more than £5 in most places) will enable the phone to be used with any SIM, regardless of its network.
Most if not all PAYG phones are locked to their networks but most can be unlocked.
Nokias and most Samsungs can be done by 'remote unlocking' using a code and can be done free.
If you want a totally unlocked and unbranded handset then you need to buy 'simfree' from someone like Live Telecom which will take any simcard except 3.
Handset only doesn't always mean 'unlocked' as some retailers 'split' boxes and sell the handset and simcard that came with it to two seperate customers.
Cheapest way is to buy a PAYG handset and unlock it.