Well kaybee, since you last posted about your troubles with Virgin, and I tried helping you, I suffered really bad problems regarding losing my connection, some days I would be lucky if I had the internet for an hour, other days I might be lucky and have it for 5 or 6 hours.
I was constantly on the phone to Virgin trying to get it sorted, I tried 3 different Belkin routers (2 were old, one was brand new), changed all my filters, went through the same routine with the support staff over and over again, they had me running all over the house trying the router in different phone sockets, but nothing ever worked.
In the end I gave up and started reading up on other ISP's (when I was lucky enough to get connected), I couldn't decide who I wanted to go with. Unbeknown to me they were still trying at their end to sort things out though, possibly even looking at their log of my internet activity, because they did something I never expected. They called me on my mobile whilst I was at work one day and asked if they could send me a new router to see if that would cure things. Of course I said yes, next day a Netgear router turned up, the problem remained a little bit so I called them up, they had me change a few settings in the router and for the most part everything is fine these days.
They were not obliged to send me a router, because that was never part of the contract in the first place, years ago when I upgraded to broadband with them they supplied me with a modem, it was down to me to change to a router when I decided to get all the computers in the house connected.
Anyway, on the odd occasion that I do lose the connection now, I just go into the router configuration page, restart the router and everything is fine.
I know this is not answering your question about O2, but just thought I would share my experience, maybe you should push for a new router from them.