I went to England in November for 9 days. I spent most of the time in Oxford, which doesn't have a LYS, though apparently there is a place that sells yarn (but I didn't find it). The closest LYS was in a nearby town, but I had no car most of the time.
It seems that there are LYS's along the southern coast in a few seaside towns, several in London (which is HUGE), and a cluster in the north of the country where knitting is a long tradition, and sheep are a way of life.
One recommendation I got was to go to Liberty in London, which specializes in Rowan yarns. With the very weak dollar, I found that the Rowan yarns were the same price, or even a little more expensive there. I wanted to go to Stash Yarns in London, as it was mentioned in several blogs as a favorite. But the trip into London from Oxford via bus (the affordable option, though not cheap) took 2 and a half hours each way the day we went (normally 1.5 hours), and because my son had already experienced rush hour on the Tube, I promised we wouldn't be on the tube after 4 PM. Soooo, I didn't get there. Like many US LYS's, yarn shops in England tend to be in out of the way places, that aren't easy to get to.
I am adding some links below.
Stash Yarns London
Stitch n'Bitch UK
London Yarn Shops
There is an awesome UK Google map of yarn stores. To have to track it down and will add it later.
I did find some good magazines in England in the Borders in Oxford.
The British magazines come in a plastic bag and always include cute give-aways. I got stitch markers, 2008 diaries, patterns for a Shaun the Sheep mobile, etc.
The Simply Knitting Issue 35- December, 2007, has a wonderful Seaweed Scarf .
To get a better idea of what it looks like - click on the picture to make it bigger. Also, for some reason, the blogs I found with knitters working on it showed it in colors different from the color called for - which is Rowan Scottish Tweed 4-ply in Apple (00015).
It calls for 6 balls which I ordered from Webs
I also got a cute book Knitted Icons.