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iphone 4 and standard sim package

hi a friend recently renewed their orange contract, and got a really low retentions offer with 750mb unlimited data well fair use data package included, and unlimited texts and a lot of mins etc. anyway they got the samsung galaxy s and they really wanted the iphone.

if they bought an unlocked iphone 4, would their sim card work in the phone? i mean if they cut it so it was a mirco sim card etc. im worried more about the data and network side. can you use a standard tarrif on an iphone phone or does it need to be a iphone tarrif or sim activation??
just worried if they buy the phone, the standard 3g sim tarrif wont work? help??
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