Yes you can use your iphone SIM in another phone, so long as they are on the same network or the G1 is network unlocked.
You can use a pre-paid 3G SIM also, but in both cases you may find you have to change the G1 settings manually for data connection to the network of the SIM, even if the phone is unlocked
The Android developer SDK emulator has a commands to assist with gps location-based apps-
Geo Location Provider Emulation
The console provides commands to let you set the geo position used by an emulator emulated device. You can use the geo command to send a simple GPS fix to the emulator, without needing to use NMEA 1083 formatting. The usage for the command is: geo <fix|nmea>
Start-up command: -gps <device>
Redirect NMEA GPS to character device. Use this command to emulate an NMEA-compatible GPS unit connected to an external character device or socket. The format of <device> must be QEMU-specific serial device specification. See the documentation for 'serial -dev' at
http://www.bellard.org/qemu/qemu-doc.html#SEC10
