Yes, the Sim card is actually quite sensitive. You don't even need to to swap it alot for it to go bad. Most phone companies will send you a replacement for around $20.
Yes they can.
The same things that make other electronics go bad: water, chemicals, and extreme temperatures.
Yes they often do go bad
ALL mobile phones have a SIM CARD - It's what distinguishes the individual identity of the phone.
Remove plastic cover with T-Mobile Logo from left side of unit to reveal sim card location.