WOW - thanks for the replies and yes i still can't believe how lucky i am. I've talked it over with my friend today and told him my thoughts and reservations. He finds it hilarious. 'spend it. enjoy it!' he kept telling me.
So after much thinking and persuading it's been decided that i will cash the cheque and we are going to put £5000 each into my 2 kids trust funds and my friend is happy with this. I didn't want to think i owed my mate something as i thought he was just coming to visit for a drink and a catch up. It was very surreal.
To answer some other questions he contacted me through Facebook and i do think he is lonely. He's divorced with 2 little kids and lives alone. Although he told me "I'm pretty encouragable with woman " so i guess he's not that lonely!. He travels around the world a lot , a couple of days in a different country every week.
Anyway , that's one of the strangest weekends I've ever had. Bank 1st thing tomorrow then transfer the cash over into the trust funds.