All GSM Sim cards are physically identical and can be swapped between any type or make of phone if the phone is Sim-free(unlocked) Most stores such as CPW & Phones4u sell unlocked handsets but be prepared to pay full price for them. Alternatively if you buy a network-locked PAYG phone it must be on the same network as your current Sim card. Lastly if your current contract has been in force for 12months your network provider will offer you an upgrade phone of your choice at a hugely discounted price.Failing that take out a new contract, better deals are always available if you ask.
I've upgraded 3 or 4 times and always used the same sim card, so you should have no problems. Just check when you order a new phone that your sim card wil fit your new phone.
Your SIM card should work with almost any unlocked fone, however, keeping one SIM card with a new fone, MAY not give you all features of the new fone, it also depends on what fone you wanna get, i.e. Nokia/Motorola/Samsung, cos if you get any problems with it, your network provider may not be able to help you, cos not every network has every fone.