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SIM cards (Subscriber Identity Module) are used to communicate on GSM networks. With the introduction of UMTS or 3G, it's highly recommended to use a USIM card to access UMTS network. Although it's possible to access it with a simple SIM card, the USIM have many advantages as compared to the SIM:

A USIM is a tiny computer which is able to handle several mini applications, for instance a contactless e-purse for the subway, a local service portal giving you access to your phone bill, etc;

A 3G (UMTS) handset equipped with a USIM card can be used to make video calls, assuming the calling area is covered by a 3G network;

Regarding security, a new algorithm is integrated (it's derived from recent researches in cryptology). It allows to protect you from unauthorized access to your phone line, and therefore to be charged with fraudulent calls on your bill;

Your calls and data exchanges are encrypted using keys computed by the USIM, and these keys are stronger than those provided by SIMs.

The phonebook is much bigger on the USIM, allowing thousands of contacts (instead of a maximum of 255 in a SIM). Each USIM contact is also richer, for instance it can contain email addresses, a second or third phone number, etc;

Contacts in the USIM are stored much more securely on the USIM as compared to using the phone memory.