The iPhone 5 uses the new Nano SIM which supposedly is different from your typical SIM cards. Its maker had earlier mentioned that one can’t simply cut a nano SIM from standard SIM cards because of its 15% reduction in thickness. Some have suggested shaving off 0.09mm by using sandpaper to match the nano SIM dimensions.
While that sounds like a lot of hassle, it seems that the thickness is something you need not worry about as many has tried using their cut out nano SIMs without any issues. @l33tdawg from HITB has confirmed that the Nano SIM can be cut from the standard sim and it will work fine on the iPhone 5. It was said that the iPhone 5 has sufficient depth so there shouldn’t be any issues having your freshly cut nano SIM stuck in the phone. Head over to HITB to check out the iPhone 5 review.
CNet Asia which earlier showed a guide about cutting and shaving the Nano SIM to spec also has confirmed that thickness does not matter. As long as the dimensions fit into the tray, you should be able to use it without issues.
So there you have it. Instead of paying for a telco issued nano-SIM card, you now have a cheaper option to cut it out with a puncher. If the makers of nano SIM intended to make thickness as a deterent to self-cutting, they have obviously failed to do so with the iPhone 5. While it works for the iPhone 5, this technique might not necessary work with future nano SIM devices that has less tolerance on height.
Thanks to @l33tdawg for the tip!