What on earth is this all about?
No, you can't put any old PAYG sim in an iPhone, that's total nonsense. Unless your SIM is for one of the iPhone/O2 deals, you need to unlock, even if the sim you want to put in is an O2 one on a different tariff.
lol, nice manner.
Whenever I've had a SIM-locked handset before, I've been able to swap SIMs from the same network (as most of my friends/family are always on the same network: O2 recently, and Orange a year or so back) - a MIXTURE of PAYG and contract SIMs - and all of the O2 SIMs have worked in O2-locked handsets, and Orange SIMs have worked in Orange-locked handsets. I can only go by my personal experience. The iPhone will still need to be activation hacked, of course.
It's just a *network* lock, or at least that's what I've always found. If Apple has set things up differently with the iPhone - which they may have - then I apologise for giving wrong information - although it was only speculation, hence the use of "should".