Can you just switch SIM from iPhone 4s to the iPhone 5?

So, my friend is offering to sell me an iPhone 5.
I currently have the iPhone 4S.

I understand that both of the SIMS are different, and I will go to the store to get my SIM Card cut to the nano requirements for the 5.

My questions are though,

Do I have to get another plan or something?
Do I have to pay extra? Or will this work just fine and can I use the phone normally as I have been using the 4S, assuming that the SIM card is perfectly cut?

I don't know if this helps, but I use AT&T.

First requirement as you said is the physical differences between the two SIM cards. Second, make sure your friend's iphone 5 is ATT as well. If it isn't you may have to unlock it before being able to use it.