As long as you have a form of driving licence, insurance, tax and valid MOT, you are fine to drive in the UK.
It is not illegal to be a holder of the older paper-based licences (unless it was issued after 1998, see update below). However it is highly recommended that you apply for a newer photo licence.
The photo licences are a lot more accurate than the old paper-based licences and cuts the number of licence frauds in the country. It also increases accuracy and speed of dealing with enquiries, for example, if you are stopped by the police, a paper licence can take 20 minutes to process, wasting both yours and the police's time. A photo licence can be processed in 5 minutes.
No paper licences are being issued anymore due to European laws. However, holding a previous paper license is not illegal. But it is highly recommended you get it upgraded.
--- MAY 2015 UPDATE ---
As of the 8th June 2015, all paper licences which were issued after 1998 are no longer valid. You will need to have a photo licence produced. This is to cut down on:
If you are licensed to drive in the UK you must have a driving licence, yes. This can be a photo card licence, or a paper licence.
Yes, driving without a license in the United States is illegal.
if they have a licence there not illegal
You can use an EU driving licence in the UK until it expires.
In the UK there is no such thing as an International Driving Licence - your UK licence is valid throughout Europe
yes everwhere you do Any EU driving licence will be acceptable for driving in Poland; for EU citizens there is no need to get an international licence.
A 'full UK driving licence' refers to a driving licence issued by a UK authority that entitles the bearer to drive a car on the public highway without L plates or supervision.
If you have an EU driving licence, you may use the licence for as long as it is valid. If you have a licence from outside the EU, you may only use it for the first 12 months that you are in the UK. After this time you must obtain a UK licence.
The most acceptable is a current passport (of any nationality) followed by a photocard driving licence. Other ID will vary according to who is asking for it.
you can not drive with algerian driving licence but you can live in France for 6 months and exchange your algerian licence to a french one and you can drive in the UK
EU driving licences do not need to be converted to UK licences.
EU driving licences can be used in the UK for life (provided the licence does not expire).
A valid Irish Driving Licence is acceptable in the UK, you are not required to change it.
Any overseas (non-EU) driving licence can be used in the UK for up to a year.