Iphone, Iphone 3G and Iphone 3GS all work in Thailand, however, there is no 3G coverage because the three operators and the government are arguing over the 3G spectrum licensing terms.

Everything is in place for 3G but they have wasted 2 years+ so far with red tape and no progress.

You can buy a local prepaid SIM card (2G) from 7-11.

AIS and DTAC have best coverage, True is not good outside the cities. You can get 1 month "unlimited" GPRS/Edge connectivity for 999 Baht on prepaid.