Nope.

The iPhone has exclusive deals with specific carriers. In the USA, that is only AT&T. You can't put just any old sim card in there. I'm pretty sure you can't even put just any old AT&T sim card in there, it has to be the one that came with the phone. It's one of the things people bitch about with the iPhone.

When the time came for me to get an iPhone, I simply ported my number from my old T-Mobile account to AT&T and it was all done. Took about 5 minutes. Of course, I had to buy into a 2-year AT&T contract, but I wanted to switch carriers anyway (wasn't happy with Tmobile's coverage).

The older firmware on the old iPhone had been "cracked", allowing people to hack their phones so they could use other sim cards, so a lot of people did that. They did not get the benefit of all the new software upgrades, though, because a software upgrade would erase the hacks. They had to wait for each upgrade to subsequently get hacked, so their software was always months behind. (Although they did get the benefit of a bunch of hack apps that the regular iphone customers didn't get.)

I haven't checked lately to see if the latest software has been properly hacked. But then again, new software is supposed to come out today, so I would guess "not".

Keep in mind that there are two levels of cracking for the iPhone: There is the "Jailbreak" which lets third party programs get installed, then there is the "Unlock", the actual sim-unlock crack which lets you use a different SIM. Shortly after the 3G phones came out, they had a jailbreak but not a sim crack. I haven't looked lately to see what they *do* have.

Sorry meant to say that I have AT&T now.

Oh, to add a bit based on your exact plan. If you buy an iPhone at the $199 price, it's going to place a 2 year contract and upgrade lock on your account. So if you give the phone to your wife, it will get around the $200 additional charge she would have to pay, but it prevents you from upgrading at a cheeper price for the next 2 years.

Then you don't need to worry about sim hacking. You just walk into the store and buy the phone and they hook it up to your existing AT&T account. You don't need to move the sim from one phone to the other, the process of buying the phone will activate the new sim in the phone and will transfer your number to it.

There is something about "Eligibility" for existing AT&T customer. If you are eligible, you get the cheap subsidized price for the phone. If you are not eligible, then you pay more for the phone. Details here.