If I use a prepaid SIM card from AT&T retail store in iPhone, do I get 3G or GSM service?
Presuming that it's not a CMDA iPhone (i.e. not from Verizon/Sprint), you will see '3G' if you're in a 3G coverage area. The Enable 3G and Cellular Data options must be turned on in the Settings.

Sidenote: AT&amp;T requires purchasing a data package for their smartphones; no Pay per use.

As AT&amp;T also had a GSM network, you could also access that (and GPRS/EDGE as well).

Usual Terms and Conditions will probably apply.