Hi Trish
Couple of issues to consider here, before you leave AUS.
1) Some phones are carrier blocked. Meaning when you get to UK, you wont be able to use a non-telstra SIM. (Don't take there word for this. Find a friend with alternative carrier and check)
2) Int Roaming has to be turned on before you leave, to save many hassles when OS. Also, remember to get the phone configured to allow you to get your messages while OS. (Or turn it off, to save some $$$, per minute rate to retrieve is the same as calling AUS)
International Roaming is very, very expensive. Even local to local when your in the UK. I'm with Optus and last time I was there, I was paid $2.50 for a 1 min call.
Calls back to AUS will cost you about $4.50 for 1min 30 sec.
Also remember if you have your phone on Int Roam, then you pay for all incoming calls as well. (Me about $1.60 / min)
With SMS, you pay to send the SMS back to AUS (0.70c) then you pay for the outgoing SMS as well.
The best way to go is getting a local SIM, like you suggested. I'm sure you could walk into any mobile phone shop and buy a sim, with some prepaid minutes. And top it up as required, so your Aussie friends can call you any time. Phoning UK to AUS with prepaid is also expensive, so better using a land line for this.
Hope all this helps
Robert