Last iMore heard, the iPhone 5 was still on track for an October, 2012 release, and since Apple has succeeded in getting a newer, smaller nano-SIM standard passed, Europeans carriers are now reportedly placing orders for the tiny new chips in anticipation of the launch. The Financial Times says it's because carriers don't want to get caught flat-footed again, the way they were when Apple switched to micro SIMs with the original iPad and later, the iPhone 4.
One informed person said that the major networks were keen to be ahead of demand this time, however. He added that the iPhone 5 was likely to be similar sized as the iPhone 4 although slimmer and with a fully metal body.
Apple fought long and hard with the likes of BlackBerry-maker RIM, Google-owned Android manufacturer Motorola, and Microsoft Windows Phone-partner Nokia to get the nano-SIM approved.
The Subscriber Identity Module (SIM) card is what's used by GSM carriers (including LTE carriers) to provide network service to a phone, tablet, or other cellular device. The nano-SIM contains the same chip as the micro-SIM found in the current iPhone 4S and iPhone 4, and all models of iPad, as well as the mini-SIM found in the iPhone 3GS and other phones. The plastic packaging around it is simply almost completely gone, which means the tray that holds it can be smaller, which means it takes up slightly less space inside the device.
That may seem trivial, but since the next generation iPhone likely won't be much bigger than the current generation, even with the rumored 4-inch, 16:9 display, Apple won't have the iPad-like space to fit all the parts into. As with the rumored switch to a micro Dock port, every millimeter of space will be vital to fitting in every milliamp of battery, not to mention an LTE radio.
Source: Financial Times