Sorry to hear about that.
I've had a few cars seized by the police for "licence" problems, they said I was disqualified (when I wasn't), they said my licence wasn't real (it is), I wasn't allowed to drive blue-light vehicles (I am), and I was spending a stupid amount of time waiting at Birkenhead Police Station for it to be sorted out (be aware, they are only open until about one o'clock for car seizure returns).
DVLA do mess up, with mine they had made an error when they linked two licences, I ended up being threatened (more than once) with being arrested, but I knew 100% I was in the right and eventually DS Fox (who is the officer in charge of the Tango team at Birkenhead) realised that something wasn't quite right and dug into it, I now have a letter from them which basically says to call him before you try and take a car from me
Birkenhead are INCREDIBLY slow to process returning cars, you can spend hours (or even days) at the Police staion, and even when they have confirmed everything and given you the release authority for RNW you have to go through the whole thing again there (although what it has to do with them I have no idea). A friend once had a car seized in another county and asked me go and get it, the visit to the police station took less than five minutes and the garage that held the car just took a copy of my ID and gave me the car back, much easier.
From memory they don't charge you over the weekend, although if you don't get the car back by a certain time of day (1pm or 3pm, I forget) they will charge you another day, and just because RNW have held you up for two hours which put you over, they will still charge you.
With regard to your licence, and all drivers should check this, the old paper licence was basically valid until you reach 70, the photocard licence only lasts for 10 years from date of issue and for many this can now be reching (if it has not already) expiry. To check have a look on your photocard under "4b" and it will tell you that it has a Valid to on it. You should receive a D798 from DVLA to renew but a lot of people don't get them (change of address etc) or don't realise what they are, It costs about £20.00 to renew and you need a new up-to-date picture. If you don't have the D798 use a D1 from the Post Office.
DVLA say that you can still drive whilst waiting for your replacement but if you don't renew it you could be charged with "failing to renew" your licence. I also seem to recall (but I don't know if this has changed) that after so many years of failing to renew they will suspend, then cancel, your licence, meaning you don't have one and have to take your test all over again, but I don't know if this is valid or not (I seem to recall that this was after 15 years and the first photocards were only issued just over 12years ago).
The DirectGov website says that you can renew it at certain post offices Renew Licence