1. There's a market for both. There's information about both types of working on the main saafe site ("ways of working", "keeping yourself safe", "outcalls", "hiring a driver") and on other threads in this forum (search for "incalls"). We all have different preferences when it comes to this.
2. Prostitution is not regulated here, but you should pay tax. Just tell HMRC that you want to register as self-employed. It's up to you whether you register as an escort or something else as cover. As long as you declare your earnings, they don't care.
3. A lot of ladies only advertise online now, we feel that it gets us a better standard of clients and we like not having to go through our appearance and services with every caller. Plenty of others still like using the newspapers, either exclusively or along with their websites. Websites take some initial setup but take some of the hassle out of work thereafter. Newspaper ads are very quick to set up and more anonymous. I made my own site, so I can't tell you much about prices. You can do perfectly well with a free template-based site (either escort orientated like rare-escorts, or generic like moonfruit), though it's nice to have your own.
4. Either or both, it's up to you.
5. Airports are popular and Heathrow seems to have some of the highest rates in the country.
6. You don't have to, but GUM clinics and outreach projects will give you free condoms if you want. The easiest way to stock up is to order in bulk online, I only have to buy mine once or twice a year.