Latest iPhone Nano Scuttlebutt: Cheaper? Yes. Smaller? No.

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Who’s ready for some more iPhone rumors? Here’s what we have so far:

Bloomberg started things off with rumors of a smaller, cheaper iPhone and an iPhone that could work on any network in the world—it may be two different phones or the smaller phone may be the world phone.

The Wall Street Journal then chimed in and bolstered rumors of a smaller, cheaper iPhone but said it would be half the size of the iPhone 4, not two-thirds the size like Bloomberg said. Get it together, Bloomberg!

Then Cult of Mac jumped aboard the smaller, cheaper iPhone train and went as far as saying that this little phone might not even have any local storage—everything would be streamed from the cloud.

Several auxiliary rumors broke out, too; most concerning the iPhone 5, which is expected in June and is not to be confused with the smaller, cheaper iPhone meant to appeal to people looking for a more affordable phone. Both phones may very well be announced at the same time, though.

And now the New York Times weighs in, saying that the smaller, cheaper iPhone is real—according to anonymous sources, of course—but that it will only be cheaper, not smaller. As much as all these rumors drive me up the wall, this latest one actually makes the most sense.

Want to make a cheaper iPhone? Take an existing design and strip out some of the more expensive components. Apple could basically re-issue the iPhone 3G or 3GS and have carriers give it away for free with a two-year contract.

Hell, the iPhone 3GS is already only $50 on AT&T. Why go to the trouble of completely designing a new, smaller handset? It’s not like the iPhone—any model—is exactly cumbersome.

The Times reports that “a smaller device would not necessarily be much cheaper to manufacture,” and adds the following:

“Another senior Apple executive said during a private meeting recently that it did not make sense for the company to make multiple iPhone models, noting that Apple would stick with its practice of dropping the price of older models when it introduced a new one.”

So perhaps the mythical cheaper iPhone will simply come about naturally: the iPhone 5 gets announced in June, the iPhone 4 drops to $100 and then $50 a little after that and, if Apple keeps the 3GS around, it drops down to free. Maybe Apple stuffs a Verizon chipset into the 3GS for good measure, too.

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