In a bid to clear up some issues, the below is my opinion and not oranges.
The reason you were referred to Apple is because there's a technical agreement where Apple basically own the chain of repair from customer to endpoint for all telcos. That said, outside of replacing the handset the genius bar apparently knows not a lot as the network hasn't changed dramatically since the merger (outside of the 2G link) so I don't really know how that could affect signal.
Regarding the SIM - is the SIM you're using from before 2006? If so it could be an old generation SIM which doesn't support 3G but this is pretty rare and as you have an iPhone 4 I'm guessing you're using a microSIM orange provided instead of chopping up your own right? Replacement of the SIM is unlikely to fix anything although it can be damaged but this is quite rare. It could be a configuration issue but the more common thing is that people don't go into 3G range (yes, even in cities) or that the phone doesn't automatically switch over to it because of signal quality. You can force the latter by switching airplane mode on and off
http://www.sitefinder.ofcom.org.uk/ - map of masts in the UK. 3G masts are 2100Mhz, 2G are 1800 for orange.
As for cancelling...while I'm sure you're unhappy about this (and please don't shoot the messenger) signal quality is something explicitly mentioned in the contract and it's extremely rare that you would be able to cancel your contract without paying the rest of it. We are talking blood from stone difficulty.
For upgrades - the best way would probably be Ebay the 4, buy SIM free iphone 5. All other methods will incur a greater cost to you.
NOM2 - I asked a few people godin and no one really knows. I can sorta see it from an automated system POV (Lots of machines use 2G network to send images, trafficmaster for example, updates etc... if you could interrupt this by accidentally calling it / coldcall then the system might cry) but I couldn't find out anything definitive sorry.
