The British Royal Marines have used the M16 for quite a long time. I saw a Royal Marine Commando in North Ireland in 1980 with an M16/M203. I've seen footage and stills since then of RM troops with M16's. When they had the L1A1, they usually had a couple guys with the M16/M203 as well. I beleive they simply replaced a few of the Sterling SMGs that they carried around with some of these, as the Sterlings ceased to be evident after the Malvinas/Falklands.
With the SA-80, because of the problems they've had with that, it's not suprising to see the C7/C8. The UK has an extensive inventory of the M16 series weapon. They've been using them since 1965. They also have a ready source from them here in North America, either from Daimeco or US stocks.
The SA-80 is undergoing a rebuilding program. HK was awarded a contract to fix the thing, since it's reliability has been somewhat lacking. Odds are that with the small number of troops they're sending in, you'll see many armed with the M16/C7 series.
Ross