One US iPhone -- UK and US SIM Cards

The iPhone is carrier locked to a particular carrier. The SIM cards aren't interchangeable between carriers.

The iPhone handset is locked into the SIM so that if you place another SIM card into the iPhone, it would have to be reactivated to work. You can place the iPhone SIM card into another non-Apple mobile phone, and it will work, but only on the same carrier. So it would seem that the handset is locked to the SIM card, but the SIM card is locked to the carrier.

In short, you cannot use an AT&T iPhone handset with an 02 iPhone SIM card, and simply pay local 02 call charges. You are locked into AT&T, regardless of whether you're in the US or abroad. If you travel regularly, it might be cheaper simply to have 2 iPhones, but as far as the UK is concerned (and the US also?), you'd be paying monthly charges - the minimum in the UK is £35/month for 600 mins of calls, 500 texts, and unlimited data.

Absolutely not able to do that.

The US iPhone is locked to ATT -- if you put in an O2 sim, it will say "no network detected" because it will only look for the ATT SIM card.

The UK iPHone is locked to O2 -- you can not put an ATT sim in it and have it work.

Every country has it's own mutually exclusive iPhone. Even in France, where they have an "unlocked" iPHone, you can only unlock it if you are a French citizen with a french credit card. It then does not always work on all other networks either, although reports are it's getting better.

Apple makes exclusive contracts with each country, and each iPhone released in that country will work ONLY with the network under contract.

I do a lot of travelling to Paris -- I use my iPhone in the US and Canada when I travel, but I use an Orange smartphone when I am in Paris. Cheapest way. I remove the SIM on my iPHone and use only the iPod and PDA features while overseas. The WiFi works perfectly while traveling, but I use my French phone for calls, text, and e-mail.

From the phones IMEI number Apple can tell which country a specfic iPhone was made for and iTunes will not allow registration in the wrong country