Yup, cannabis and cannabinol derivatives were downgraded to class C drugs on january 29 2004. In theory is you were caught in possession and there were aggravating circumstances that convinced the CPS it was worth prosecuting you it's possible you could be obliged to spend two years as a guest of her Majesty.
Guidance from on high means that in general police won't look to prosecute for possession for it's own sake.
http://news.bbc.co.uk/1/hi/uk/3103416.stmI've got a copy of the misuse of drugs act if you want a look.
As a side note it's interesting to know that prior to 1971 British narcotics control policy was very liberal. It was in fact possible to obtain small amounts of drugs on prescription in order to manage an addiction with a view to recovery. The MODA1971 was actually passed as a result of intense pressure from the United States.