If you are in the middle of a two-year service agreement, you would have to pay the ETF to cancel it. There is also a possibility that your phone would not accept a prepaid SIM.
I am on a 30 day contract with AT&T. I bought an unlocked GSM Treo Pro from Palm.
Interesting point you made. I wonder if a prepaid SIM card would work on my current phone. I'll have to do some searching. If nothing else, it will give me a reason to call AT&T, present the facts, and see if they will lower my monthly bill.
When my wife and I go to Europe, it's real easy to stop by any mobile phone center and get a 30 day SIM card. Over here in the US, everyone wants you to sign a two year contract. Whether it's for mobile phone service, cable TV...etc...