I never wanted to be a SAHM but ended up this way.
hmc, I think your question about the identity is interesting - I think a lot of my identity was tied up to the work I was doing, largely because that was what made up the majority of my life for almost 9 years before I had kids. Yes, I had friends outside work and did other things but most of my time/thinking space was taken up with work/work people and so I think, a large part of my identity was just that.
Also, I had a project based job where I had to work to deadlines and got very used to living life 'achieving' set targets and earning a salary.
You suddenly take all that away, having lived it for years and it does feel strange. I'm a relatively self sufficient person and don't find it hard to make friends so I'm lucky that I've never suffered from loneliness, but I can very much relate to the 'not feeling valuable' despite the fact that I had a supportive (of me being at home) dh.
I don't know what to suggest really - some people suggest doing a course that you are interested in, I would agree with the 'get out a lot' bits and once your child is older, you can help out at school/pre-school if you like or volunteer your time elsewhere.
But I do think there are some people who are just not suited to being at home and you may find that you are one of them. There's nothing wrong with that and it may be that you find £1k take home a year is not so bad if it means you feel better about yourself iyswim.
When they are 16months, it's still very hard though and if you want to stick it out, you'll probably find it gets easier as you start getting more time to yourself and can actually DO things without having a small child attached to your leg (and I don't mean those snatched days where you arrange childcare - but once they start at school/pre-school, and you have a regular slot each day where you can do what you want).