My fiancee has an Iphone 3GS she wants to get rid of on O2 contract. Would she be able to use the same sim card in a normal phone?

Thanks

yes she would

She can, its a good idea to contact O2 and change to a normal tariff. (She'll want to access tHe normal APN, voicemail, MMS etc)

Depending how long she has had the handset it may even be cheaper each month.