I was reading the usual tech sites and came across
over at TUAW. It was about using an O2 SIM card (not the U.K. phone company, the U.S.A.
one - which is now called H2O) in the iPhone 4. All you had to do was activate the SIM,
then cut it down to fit into the iPhone's micro (with iPhone 5 it will be a nano) SIM card
tray and it just worked. Of course these SIMs will all work in iPhone 5 as well (provided
you can unlock it or you have a factory unlocked model.
Perhaps you received an iPhone as a gift and don't want to sign a two year contract with AT&T, or maybe you just aren't much of a talker but still like smartphones, or maybe you don't live in an area serviced by AT&T. Whatever your situation is, you have other options. You can get data using H2O - they resell AT&T service. However the service plan requires a voice plan and comes with limited data.
If you have an unlocked iPhone then you can use Simple Mobile or T-Mobile. You can get data with both of these companies as well. I purchased a Simple Mobile SIM from their website here. They also have a network of resellers in various retail stores so check their site. You can get data, tether, use MMS and FaceTime on Simple Mobile and T-Mobile. Simple Mobile will require you to pay every month: you can't keep your minutes over a long period of time like you can with H2O or T-Mobile pre-paid accounts.
It is possible to restore the iPhone with an inactive AT&T, Cingular, GoPhone, H2O, and a newly purchased O2 SIM. they will activate the iPhone. You can purchase airtime recharge cards at most convenience or electronics store. You must purchase an AT&T GoPhone SIM directly from an AT&T store so that it will work with your iPhone. If you purchase one bundled with a phone it most likely will not work.
I purchased an O2 pre-paid SIM card at Best Buy. You can see their site here.
The next step is to cut your SIM down to the size that the iPhone 5 will accept. I used the Noosy SIM cutter which I purchased here. The cool thing about this is mine came with SIM adapter trays to convert the nano SIM back to a micro and a full size SIM.
There is a Wiki that lists (based on country) which pay as you go SIMs are available for your iPhone.