You need to contact the old network and ask for a replacement sim card. Assuming they will send you this, I would guess that the contract will continue and it is for you to buy a phone and put the sim card into it. It is up to the network what options and bundles they offer for your particular contract. The network may also be able to block any further use of the lost phone (they may need the IMEI number to do this - it is printed on the original box for the phone).
Personally I would be very hesitant about giving a £300 phone to someone who has just lost another phone. You ask if anyone knows cheaper (is this what you want to hear?) but the last time I was in CarPhoneWarehouse, they had some phone for £5 that would take any sim card.