If I terminate my AT&T contract will they take my iPhone back or do I keep it?

Some are saying they will cut my 4g service or may be I will not be able to use any phone features. What does that mean? Since I wan to switch to prepaid service of another company, can I use this phone (Iphone 5) with the new sim?

No, you will not be able to use it with another carrier. They will also bill you for it if you did not complete your contract.

They will cut the phone off and charge you for the remainder of contract and for the phone.

Actually, depends. You might be able to switch out sim cards… And possibly jailbreak the phone.
If you unlock it, then you might be able to switch carriers - all depends on a few factors.
But the phone is yours to keep.

Id take out money from my account if I were you, because they might try to charge the account whatever disconnection fees you agred to in your contract.

Look online and se if you can jailbreak it still.
Even if you disconnect an android smart phone, you can still connect to Wi-Fi and use all apps on phone.
Call different carriers and see what your options are about a phone without a sim card that you legally own

Unless you payed for a UNLOCKED iPhone you will not be able to put another carriers SIM card in it. To answer your question, you will be able to keep your phone but will be charged a high fee.

Your iphone is carrier locked. This means you can only use it on AT & T networks.

Your contract is also legally binding. You are responsible for completing the full terms of the contract. If you cancel you will be billed for the the rest of the contract. They will not take your iphone back, it's yours. However without the ability to access the interenet and make hone calls, it will be nothing more than a $700 ipod.

You keep the phone and can probably use it with another carrier. Make sure you have completed your contract or the penalty to do this can be huge.

Nope, it will not be usable with another provider.