How successfully you'll be able to sell your current property and trade up in 2012 depends very much on the local market and, in particular, whether you can find a buyer in a strong financial position. Even if you do find a buyer, finding a property to move to won't necessarily be easy. Because of uncertainty about the future of house prices and many homes having fallen in value over the past 5 years, people are tending to 'batten down the hatches' and stay where they are at the moment, only moving if they absolutely have to.
For sellers, it is vital to take good advice and price fairly, rather than 'test the market' at an optimistic price, as was the norm prior to the credit crunch. Many homeowners who bought in 2006 or 2007 and are now trying to sell, are marketing their properties at the same price or a little bit more than they bought the property for. Unfortunately, very few areas have recovered from the average 20% falls since 2007, and most are still 10% down. Added to that, buyers are much more savvy these days, with access to lots of sold property price data and other valuation tools - such as PropertyCheck from Experian, a service that not only provides up to date property valuations but also invaluable insights into the local neighbourhood and who your neighbours are likely to be, all of which help buyers access what a property is really worth. Any overvalued homes just won't sell.
On the plus side, trading up in a falling market will typically benefit you financially in the short-term. Selling a £150,000 property at a 10% discount would 'cost' you £15,000, but if you bought a £300,000 property, you could save £30,000, giving a net benefit of £15,000.