Hii @david.samson
Sorry if this comes across as a bit harsh. But during the past few weeks there have been so many threads in the forums from people who have either already upgraded to Ubuntu 22.04 or are planning to upgrade to 22.04. Most of them are asking similar questions, while usually not providing much detail about their setups, and still everybody seems to want personalized consultancy on how to upgrade their systems… 
However, let me try to answer a few of your questions:
Asuming that you are using the standard PHP packages from the Ubuntu repos, the upgrade to Ubuntu 22.04 will automatically upgrade the installed PHP packages to version 8.1. But it’s also possible to use third party repos in order to install diffrent PHP versions independently from your OS version.
At the moment you can still use Ubuntu 20.04 with PHP 7.4 without issues. But at some point in time you will have to upgrade PHP (in a few months probably…) or the OS (Ubuntu 20.04 is supported until 2025)
First do a backup! If you are running it in a VM, you could also take a snapshot of the VM, in order to be able to easily roll back, in case you run into a bigger issue. Then enter sudo do-release-upgrade to the terminal and grab a coffee…
After the OS upgrade is done it is possible that not everything will work right away and you maybe have to re-install and re-configure some PHP modules. But that shouldn’t be that big of an issue because you already did this at least once, otherwise you wouldn’t have a running Nextcloud instance. And maybe you even have documentetd the steps you took while installing Nextcloud. If not, you can search the forum, use the Nextcloud documetation or one of the many guides out there as a reference…
https://docs.nextcloud.com/server/latest/admin_manual/installation/example_ubuntu.html
https://www.learnlinux.tv/build-an-awesome-nextcloud-server-updated-for-ubuntu-22-04/
https://www.howtoforge.com/tutorial/ubuntu-nginx-nextcloud/
Übersicht: Anleitungen Archive - Carsten Rieger IT-Services (German)
if you are running into issues which you’re not able to solve yourself, you can of course also open a new thread. But please use the support template, post logs and error messages and provide as many details about your setup as possible.
Good luck!