You can have a photo licence if you want one, but not compulsory,
I agree that the old paper ones are still valid, providing all the details on it are still correct and it's still in force. Any new ones are compulsory. Change of address or anything else like that where it gets re-issued and it'll need to be chopped in for Photocard D/L.
don't have to carry paper one with you as you are allowed 7 days to turn up at local police station with it and any other documents
Don't have to carry a Photocard D/L around either. Still have the 7 days to present at the police station of your choice. Need not be the local one. (I'm sure the plod would love it if you had to have it on your person at all times, but that would be a back-door ID card and a lot of people would be raging.)
IMHO photo licence is probably easier to forge than the paper one printed on watermarked and security printed paper.
A Photocard D/L has it's own security features. My opinion is that they are both equally forgeable. Not something even worth trying as the plod check the database. Might be worth it (in the opinion of the holder) for lesser crimes such as buying booze and fags down the shops.
I hired a car in the UK 18 years ago without a licence. Europcar just got on the premium-rate DVLA hotline. Job done.
Now, when are they planning to put a Butcher's Apron on the card?