On a dumb phone yes contacts are stored on your SIM maybe using some kind of weak crypto, yes. On an iPhone X, it’s completely unused for crypto or security, or for any other purpose other than carrier authentication.
carrier authentication is huge! do you want someone to be able to subscribe to a network with your phone number? receive your calls? texts? or call or text as if they are you? yes the sim has little relevance to device security for most smartphones. contacts on sim are a great example of supporting legacy features for BC only. but the network is still very important to secure.
sims are used for more than just phones. the chip on your credit card is a Secure Element. the chip in your passport is too. these are some of the most physically and technically secure pieces of hardware ever made
Carrier authentication is not huge. The vast majority of communications services today are secure without a SIM, even ones that are tied to your number. Ever notice that iMessage keeps working without a SIM? The SIM card is mostly a relic that is useful to the carrier oligopoly because it increases network switching friction.
you wouldn't be able to authenticate on the data network without a sim. unless you exclusively use wifi the carrier network is still a huge part of everyone daily phone use
Because the SIM is universal, its designed to be architecture independent, the SIM is also open, when the secure element that apple is using for apple pay is not.
