I do Straight Talk SIM with an iPhone 4 on AT&T's network and the only problem I've had is no media messaging, which is not a huge deal. Also, iMessage is great for that. If you care about MMS, buy a phone from Straight Talk directly. The iPhone on Straight Talk is on the Verizon network, but since it's a VZW phone, you can use SIM as well.
Straight Talk SIM now supports LTE on AT&T if you want to go that route.
The point is, for phone service, you don't need to spend more than $45 a month and off contract phones can be had for $400 or less for top end phones (like iPhone 5 or Galaxy S3). If you don't want data, you can drop down to $25 a month or less.
There is no reason to be on contract, it no longer makes financial sense.