Smaller but cheaper iPhone possible?

There are rumors that aside from an "iPhone 5" in the works, there will also be a one-third smaller and (more interestingly) less expensive iPhone model to be introduced alongside.

Here are some of the descriptions of the rumored "iPhone nano":

• about half the size of the iPhone 4 (can be one-third smaller?)
• edge-to-edge screen 
• significantly lighter
• will have voice navigation
• $200 contract-free
• may be unveiled midyear 2011
• no "Home" button 

A dual-mode phone, or a mobile device capable of operating in GSM or CDMA, was also mentioned. I think the Verizon iPhone 4 models were rumored to be 'dual-mode capable'.

 In my opinion, the "iPhone nano" concept would be a great idea! More people will be able to afford one (provided that it is much, much cheaper than the iPhone 4), which will generate more moolah for Apple.

And where's the white version? On second thought, maybe they should make a silver gray version! ;)

The Wall Street Journal: 'Less-Pricey iPhone in the Works'
Bloomberg: 'Apple Is Said to Work on Cheaper, Smaller IPhones'