It was really hard to get this set up. I had to literally fight with AT&T, cut my own SIM, manually enter APN settings. When I have to purchase a new AT&T SIM after traveling they tell me it's not possible, that I can't do it. I explain that it is and I can, tell them how to set it up on their end. Ridiculous.
They tell me the iPhone can't do prepaid (it can), that it isn't unlocked (it is), that it won't work if it's jailbroken (it's not) and that all of my data will magically disappear (it will if you don't configure up the APN settings). They will say anything to steer you from prepaid.
Overseas in Southeast Asia you just walk in to a corner store, pay $2 for a SIM, give him a few dollars to load it up and send a text to buy a data plan. Vietnam was the cheapest, a couple bucks for gigs and gigs of mobile broadband.
I will never buy a phone on contract. AT&T is a nightmare and the fact that we're no longer married helps me rest easy.