First try turning your phone off, waiting a couple of minutes and turning it back on. This will reconnect you to the network and may help.
If it doesn't help, check the service status in your area by following this link (This may or may not give the same results as the O2 check you've already done): http://community.giffgaff.com/t5/Service-Updates/Service-Checker-and-Planned-Mast-Maintenance/td-p/4...
If you enter your postcode this should show you any local issues, including planned work, as well as indicating signal strength (2G & 3G) & outages.
If you find that there are no issues with the signal, try doing a manual roam to reconnect to the network:
1) Go to your phone's settings.
2) Select mobile network options.
3) Change the Network Selection Mode from Automatic to Manual.
A list of available networks will be displayed after a few moments.
4) Select any network that is not O2. After a few moments you will see "No Service" on the display.
5) Now select your home provider network (which is O2) and change the selection back to Automatic.
Poor signal have a read here-
Check to see if there are any outages in the mobile network where you are: http://giff.ly/ggservice
If that is OK then try turning your phone off, waiting 5 min.s and then turn it back on.
If that doesn't work then see if doing a manual roam helps http://community.giffgaff.com/t5/Learn-giffgaff-Top-Tips/manual-roam/m-p/3345471#M32502
Also try turning airplane mode on and then back off.
Ok so now 3G has completely stop, shows full 3G signal but nothing loads. I have to turn 3G off to get anything to work. I don't get it, it initially worked fine
Get an app called opensignal from the app store
It shows the local masts to you. Would you believe it makes a difference on the direction you face to the strength you receive
It may be worth checking your settings again, they will need to be entered everytime you remove the sim.
Have a look at my guide - The complete guide to the iPhone’s MMS settings