The prepaid SIM will NOT work in your iPhone unless you unlock it, which we can't discuss here (Google is your friend). What I do when traveling is take an unlocked quad band phone in addition to my US phone and buy prepaid SIM cards when I arrive at my destination. In China this is no problem; while you may not speak Mandarin, the hawkers selling China Mobile prepaid SIMs speak enough English to consummate the deal. You will be deluged by them walking through the airport, even before you clear customs and immigration.
The SIMs you get at the airport are NOT the best deal, but you can't beat the convenience of having mobile phone service even before you leave the airport.
The standard SIM is a local one, but you can get country-wide SIMs also, and even International SIMs if you go to a China Mobile dealer in any major city. The International prepaid SIMs are a really good deal, as you can call the US for about 30 cents/minute and local calls for 3 cents(2RMB)/minute. A lot better than $1.99 or $2.29.
I still carry my AT&T phone so people can reach me, but I don't use it for making calls.