Shame you've had all this trouble, and you can see how easy it is for this to roll out of control. The problem is your phone useage was not conditional on the 3UK (not '3G') contract. You don;t say what phone it was, but if a Nokia any Nokia Service Centre would have sorted the problem if your own dealer wouldn't.
A PUK code, incidentally simply unblocks 3's SIM card, it has nothing to do with transferring the number to a different network - that is called 'Porting'. You don't say how long ago this happened, but if your original dealer is still trading, you pursue him via Small Claims under SOGA with the goods not being fit for purpose. This always assumes they don't say the phone cannot have a warranty repair to to misuse.
And Martin, do you never go to bed?
Moving onto 3UK, even if your phone is faulty, your contract still runs, so not paying your bill leads to formal disconnection and charges for early termination, all of which they would win as it is covered by contract law. Add to this your credit record being tagged with a default, you really need to sort this out in association with them, who are the only people capable of removing the default.