Apple to launch cheaper, "nano-like" iPhone in Q4 07?

Snip from Reuters:

Apple Inc. plans to launch a cheaper version of the iPhone in
the fourth quarter that could be based on the ultra-slim iPod Nano music
player, according to a JP Morgan report.

Kevin Chang, a JP Morgan analyst based in Taiwan, cited people in the
supply channel he did not name and an application with the U.S Patent and
Trademark office for his report dated July 8.

Apple filed a patent application document dated July 5 that refers to a
multifunctional handheld device with a circular touch pad control, similar
to the Nano's scroll wheel.

Link