The SIM does not appear integral to the application and music part of the iPhones. It may very well stop the phone aspect from functioning however. I do own an iPhone4 and haven't tried to remove the microSIM to see what happens. I have had previous phones like palm pilots that allow you to copy the entire SIM memory to internal RAM but when you removed the SIM out of the palm pilot, you couldn't make any calls. Telcoms obviously do not want you to be able to use the phone w/o a SIM so I don't know if that could be considered violation or not.