You don't need a SIM card to use an iPhone, but it'll be as useful as an iPod touch. To setup an iPhone without a SIM card you must use iTunes (if your in the setup process).
Basically you can use iCloud and iTunes all you want, but only with Wifi. With Wifi you can send iMessages and FaceTime calls to other Apple devices. As for making text and calls to non-apple you'd have to look into a WiFi texting/calling apps.
Without cellular services and WiFi then it only use would be for taking pictures and playing music synced to it.