I personally dislike how mobile networks don't automatically reduce the bill before placing you onto a monthly rolling contact. I think all providers who offer Handset and/or in your case a Tablet contracts should have a system in place to reduce the cost of the contract once the minimum term has finished.
If you don't notify the provider and it isn't only O2 owned via Telefonica which does that all the others do it they will keep it on the orignial contract price which could include the cost of the handset/Tablet. Obviously unless you are on a Refresh Tariff.
(I believe this was a part reason why O2 Refresh exists which consists of a Airtime Cost and a Handset Cost).
That been said if they were able to disconnect and discontinue your contract as you stated without even knowing and completely cut your services off you may be unhappy that you are unable to make or recieve calls or use data and you could even be unhappy that you have lost your number should it be terminated automatically.
Morally speaking is it right to still charge that much after you have paid for your Phone/Tablet probably not, and in your case if you are not using your services, but unforunately they will turn around and say it's in the terms and conditions you signed and/or agreed to. Which unforunately is a legally binding contract between you and the provider.
That been said i'm sure you could attempt to contact O2 and explain the situation and see if there's anything they can do. They will be able to see your account usage if you haven't used your services.
