[sillysaurus2]

The SIM isn't necessary to connect to a tower, meaning your GPS position will be reported unless you remove the battery.

[kamjam]

If you remove the SIM you are usually still able to make emergency calls (911, 999, 112), which means it can still connect to cell towers.

[fnordfnordfnord]

Not necessarily your GPS, using it consumes more power ( ~ 30 - 100mA @3.3V ) than detecting your location passively using the cell-towers. It also takes longer to get a precise fix unless the phone is out in the open.