Although the Apple iPhone is designed to be used in conjunction with a mobile phone and data plan, it's possible to use the device without such a plan and enjoy many of the device's capabilities. Even after cancelling your contract and removing your SIM card, several of the iPhone's most important features remain fully functional.
Tap your iPhone's "Settings" button. Tap "Wi-Fi," then tap the grey "Off" button next to "Wi-Fi." Tap the grey "Off" button next to "Ask to Join Networks" to turn that feature -- which automatically connects you to a wireless network when one is available -- on. This ensures you're connected to the Internet whenever possible, maximising how often you can take advantage of the iPhone's Internet-dependent features.
Listen to music. Even without a SIM card, you can continue syncing the device with iTunes periodically to update the music stored on it.
Use the iPhone's camera feature to continue taking pictures -- and, if you use an iPhone 3Gs or 4, videos -- even after you remove the SIM card. Send photos and videos to your contacts via e-mail whenever you're connected to a nearby wireless network.
Make sure you've completed your wireless contract term -- or that you're OK with paying a termination fee -- before you decide you want to use your iPhone without service. Call your mobile carrier and cancel service if you haven't already done so. Removing a SIM card prevents you from making phone calls, sending text messages and using your cellular data network to connect the Internet, but if you haven't cancelled your service agreement, you are still financially responsible for fulfilling it.