Yeah, you're pretty much limited to a PAYG when you first arrive here. Your uni won't be able to do anything about it, but if you manage to get some bills in your name like the electric or the landline/internet, that could help to establish some credit and you might be able to try for one later on.
That said, if you're worried that the PAYG phones aren't that great, there are actually some really good options for PAYG phones (though mine is just a £10 little old-school thing

). I know Orange offers a BlackBerry and a couple of other smart phones that I can't think of off the top of my head. Not sure about the other providers but I'd imagine they have something equivalent or possibly even better.
There are also different PAYG plans, so you can get one that gives you, for instance, free texts if you top up by £10 or more every month, or one that will give you a certain amount of free internet if you top up £10 or more a month, etc...
With swapping out the sim, my friend brought her iPhone over from the US and managed to unlock it and put a PAYG sim in, thought I'm not sure of the specifics. I think it can be hit or miss as to whether or not that will work.