Thanks all. Its been in to the dealer. They diagnosed the problem as the water pump and replaced it and the Cambelt. Not a cheap do. Thanks for the advice, cos I may tried to drive it there, and I'm sure it would have been far more serious if I did. I had a quote to tow it 20 miles of £85! Thought I'd try the AA, as I'm a member already, and they wouldn't tow it as a one-off fee, but they would sell me the home start option for £80 (thats for both my cars). They took payment, turned up within half an hour, checked it over, agreed with the diagnosis and had no quibble taking it in for me. Quite happy with that. The garage fixed it within 2 days - i'm sure I paid a premium for it though.
hope this thread helps anyone else in future who gets similar symptoms. It'd be interesting to know how common this is.
For the record, in summary:
159 1.9 JTDM, 43K miles on a 56 plate. Water pump failure requiring replacement and cambelt kit.
symptoms: Heater blowing cold air only, some loss of coolant, squealing noise from belts, and a burning smell.