|A simple cutter will not work.|
UPDATE: Expansys Japan is taking preorders for SIM free iPhones 5s. According to ascii plus, the offer originally included a "nano SIM cutter", but this is no longer mentioned. Obviously this would be because a simple cutter will not be enough. The nano SIM is about a tenth of a millimeter thinner than previous SIMs.
This will be a problem for using an iPhone 5 with Docomo or B-Mobile, unless Docomo stamps out nano SIMs..
ALSO, Softbank may have a more well-developed FDD-LTE band 1 network than previously believed.
At iPhone 5 launch, the only compatible LTE network in Japan will most likely be NTT Docomo's Xi Network, which can be used directly with an unlocked iPhone (GSM model A1429), or with a B-Mobile LTE SIM card.
Softbank Mobile and AU each have plans to begin compatible LTE service by the end of the year using Band 1 (2100 MHz), which is the same band used by Docomo. See here for an explanation of frequency bands and cellular technologies used by Japanese carriers.
NTT Docomo and Softbank networks will be compatible for unlocked devices. AU devices are not usable on any other network in the world.
Softbank currently has an LTE network, but it is based on different technology (recall the iPad LTE debacle?) Both AU and Softbank are listed as compatible on the Apple LTE website. Interestingly the only network actually in operation is not listed. For those of you wanting a direct-from-Docomo iPhone, abandon all hope - it's never. gonna. happen.
Which iPhone is compatible?
The GSM model A1429 is the one to buy. This is NOT THE SAME MODEL THAT IS COMPATIBLE WITH US AT&T! AT&T uses LTE Band 4 (AWS 1700/2100 MHz), which is the GSM model A1428.
For 3G service, different GSM models will be interchangable between different carriers, as always. Incompatibilities will be limited to LTE.
What are the different models
AT&T (North America):
GSM model A1428: UMTS/HSPA+/DC-HSDPA (850, 900, 1900, 2100 MHz); GSM/EDGE (850, 900, 1800, 1900 MHz); LTE (Bands 4 and 17)
CDMA model A1429: CDMA EV-DO Rev. A and Rev. B (800, 1900, 2100 MHz); UMTS/HSPA+/DC-HSDPA (850, 900, 1900, 2100 MHz); GSM/EDGE (850, 900, 1800, 1900 MHz); LTE (Bands 1, 3, 5, 13, 25)
Softbank and NTT Docomo (Europe): (compatible Japanese frequencies in bold)
GSM model A1429: UMTS/HSPA+/DC-HSDPA (850, 900, 1900, 2100 MHz); GSM/EDGE (850, 900, 1800, 1900 MHz); LTE (Bands 1, 3, 5)
What's the deal with Softbank 4G?
Short answer: I don't know. Here's a screenshot from SBM's FAQ indicating that Softbank 4G is based on TD-LTE at 2500 MHz. This hasn't been updated since February 2012. However there are certainly FDD-LTE base stations that are active.