What will happen if I put my prepaid ATT SIM into an iPhone?

Will it work?

If the iPhone is not locked with any different network then the phone will accept AT&T sim and start working.Otherwise it will throw error message "Sim not valid". Then, you should unlock the phone and then swap simcards. I suggest you can approach Unlock-zone.com and specify the country,locked network of iPhone.Based on the availability you can get the permanent unlock service along with free instructions.