my i phone has stopped recieving a signal, it is on 02 and just keeps searching for a network

my i phone 16gig has stopped working it is on 02 and the network is either there briefly or disappears for ages, it seems it is now only usefull for pics tunes

can any one suggest anything, i have purchased this phone from a friend so it is not on a warranty, and is prob one of the first !

many thanks

lindylou