An iPhone can be used as an iPod without a SIM card, but a SIM card is at least necessary for the initial activation of the device. Post-activation, a SIM card is necessary if users wish to restore an iPhone.
Without a SIM card, users will receive a pop-up message every time the iPhone is rebooted.
Activating an iPhone to be used as an iPod is a relatively simple process. First, locate a SIM card that came from a previously-activated iPhone. Insert the SIM card into its slot. Then, connect the iPhone to iTunes on a computer with an Internet connection. iTunes then automatically activates the device, and it is ready to use as an iPod, either with or without a SIM card.