My experience today in Madrid getting a nano sim for my iPhone 5:

1. At the airport touts selling Lebara, but no carrier shops.

2. Vodafone shop in Velazquez said "impossible for iPhone".

3. Movistar shop in Velazquez also said impossible even more vehemently.

4. At a small phone repair shop he reluctantly sold me a mini sim & cut it to nano size. It's an Orange "tarjeta Ballena" for 15E which has 1GB & 1,000 SMS to Spanish numbers & calls @ 1c/min with call setup fee 15c. Internet worked fine for 1 minute & then stopped. It turned out that there needs to be 5E credit on the sim & as soon as the sim is activated the balance was reduced to 0 as the month's fee was taken off. Adding 5E fixed this & it's now fine.

In the past 4 months I've got sims at Cairo, Istanbul, Nice, HK, Singapore, Moscow, Shanghai & Kathmandu and Madrid has been the most difficult.