I have purchased Iphone 4 from US and its not having sim in it and rt now when i have updated this to io5 ,it is showing "sim card inserted in iphone is not supported" and i am not able access aything."

I have purchased Iphone 4 from US and its not having sim in it and rt now when i have updated this to io5 ,it is showing "sim card inserted in iphone is not supported" and i am not able access aything."
Earlier i was able to use all application in this using IOS 5.0.1.
I have format it and after that i am not able to use it.
How to restore my itunes to 5.0.1???

Well, welcome to the world of "hacked" phones. If your purchase was from the US, you obviously purchased an iPhone that is locked to a US carrier. The iPhone must have been jailbroken and unlocked via software to accommodate your foreign SIM card. Now that you have updated the phone, it is locked back to the US carrier. Only the carrier can authorize Apple to unlock the iPhone and none of the US carriers will unlock the iPhones. Best suggestion is to sell the phone and obtain a factory unlocked version directly from the Apple store.
To answer your other question, there is not a supported method to downgrade iOS.

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