It could be a network fault, check here http://status.o2.co.uk/ or it could be a sim or phone fault. Try removing and replacing the sim first and see if a reboot helps, if not, pop into your local o2 store for a free replacement sim.
I have no affiliation whatsoever with O2 or any subsidiary companies. Comments posted are entirely of my own opinion. This is not Customer Service so we are unable to help with account specific issues.