"i can't afford to buy a new phone"
As you have complained and already sent back your Nokia 5800, why don't you ask O2 what they can offer, or you will be moving to in a heartbeat when your contract ends, as this phone is driving you mad, and is unusable.
They may be willing to offer an alternative smartphone, there might be some newer phone with an 18 month contract that you could get instead from them, where the monthly fee is the same. (Being nosey, how much are they charging?)
Ask them for a list of alternatives and then use www.GSMArena.com or some other website to check how similar the phone is to the Nokia. You perhaps chose it for the ability to play music, so if you have a microSD card stufed with your favourite music, check whether any alternative accepts microSD or not.
The Sony Ericsson range seem to use the Sony M2 cards so you'd need to copy tracks over.
If they won't offer to replace the phone (and of course it is now past 12 months use, so their obligation ends, even if morally they ought to help you), then while I'd hesitate suggesting you get another Nokia, I know they can be had for under 30 pounds, unlocked (so can be kept as a spare to use for most networks you may use in future). You may well find a basic unlocked or O2-locked pohone in your nearest Asda Living / Asda which will allow you to have reliable contact using your O2 SIM.
While you may not be able/willing to pay for a new smartphone you presumably still want to be able to use text messaging and voice calls - ie the basics for any mobile network, and the 'budget' end of the PAYG market would fill that need for the next few months, even if not as stylish or fancy as a smartphone. It's all very well having some touch screen gizmo, but reliability can go down as the 'features' go up.
All my mobiles have cost less than 30 pounds, brand new, because they are bought to use for calls, texts, and FM radio. If I have been lucky, there may be a VGA camera too. Maybe they aren't at all 'flashy' but (apart from one landing in the cat's milk) do work, and keep going for years.
You may be able to flog the Nokia 5800 on Ebay marked as Faulty (and flog the microSD memory card separately).
Finally, have you ever used any fancy apps on the Nokia ? Someone was asking about an app for MSN messenger, and their phone uses the same software as yours... just curious...