The report, which cited "an industry source," said the product would launch in the U.K. by mobile phone operator O2 for the pay-as-you-go market, but offered no clue when or if it would be launched in the United States.
The report seems to indicate the iPhone Nano would be a dumb-down version of the current iPhone 3G.
"The iPhone 3G has been the fastest-selling phone ever in the U.K., but it is too expensive to be a realistic proposition in the pay-as-you-go market," the source told the newspaper. "However, a cut down version, with the candy bar shape of iPod Nano music players, would be a huge hit as a Christmas gift."
The newspaper suggests that the new iPhone Nano could have a touch wheel interface on one side and a screen on the other, meaning that calls would be dialed from behind and lack full Internet browsing functionality.
If this all sounds a bit familiar, it's because this rumor was floating around last year. Considering the wild success of the iPhone and Apple's plans for a family of iPhones, a move like this certainly makes sense. Whether Apple is ready to do it soon seems to be a bigger question.
One of the more-recent rumors has the iPod Nano getting a slimmed-down makeover. iLounge reports that Apple plans to bring back the thinner iPod Nano design of years past but in a taller package that's a nod to the screen size of today's "fat" iPod Nano.
Apple has held a September iPod event the last several years, and we're pretty sure they'll have another one on tap this year, with a revamped iPod Touch likely to accompany a new iPod Nano. In support of that suspicion, AppleInsider is reporting that resellers have been told to expect shortages of iPods and Macbooks in the coming weeks.
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