Apple Prepping Small, Cheap iPhone and Free Online Storage?

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We’ve got more fuel to add to the “iPhone Nano” rumors that caught fire late last week. The Wall Street Journal adds to Bloomberg‘s report of a smaller, less-expensive iPhone model that may hit the market as early as this summer. Both stories come from unnamed sources, so continue to take all this news with a grain of salt unless something gets officially announced.

Smaller and Cheaper?

The story so far is that Apple’s working on a smaller iPhone—Bloomberg said it’s roughly 2/3 the size of the current iPhone, the Journal says it’s “about half” the size. Both publications mention that the “Home” button has been removed, with the Journal adding the following:

“The person who saw the prototype of the new iPhone said the device was significantly lighter than the iPhone 4 and had an edge-to-edge screen that could be manipulated by touch, as well as a virtual keyboard and voice-based navigation.”

The phone would apparently be priced cheaply enough that carriers could “subsidize most or all of the retail price,” says the Journal, though no mention was made of being able to purchase the phone for $200 without signing a two-year contract, as the Bloomberg post suggests.

Free MobileMe?

The Wall Street Journal also contends that Apple may be rolling out an overhauled version of its “MobileMe” online service. MobileMe currently sells for $99 per year and synchronizes e-mail messages, contacts and calendar appointments between portable Apple devices and computers (both Macs and PCs). The Journal article continues:

“Apple is considering making MobileMe a free service that would serve as a ‘locker’ for personal memorabilia such as photos, music and videos, eliminating the need for devices to carry a lot of memory, the people familiar with the situation said.”

The article also suggests that MobileMe “could become a focal point for a new online music service that Apple has been developing for more than a year,” according to these same sources.

That’d lend credence to all the web-based iTunes rumors that have been floating around over the past year or so. The idea would be that you’d buy a song from iTunes and you’d be able to stream it to any compatible Apple device or computer running iTunes without downloading and transferring it. And you’d have access to entire music collections larger than the available storage on your iPhone, for instance.

When?

The article alleges, “The new line of iPhones and the revamped MobileMe are intended for release this summer, though those plans could change, the person said.” That timing would line up with Apple’s yearly Worldwide Developers Conference that usually takes place in June. The company historically uses the conference to launch new versions of the iPhone.

More on TIME.com:

Will Apple Announce Web Based iTunes Tomorrow?

Whispers of a No-Contract, Carrier-Jumping iPhone

The iPad 3 Rumor Mill Has Already Started Churning

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