Contrary to reports published by Bloomberg and The Wall Street Journal, The New York Times published a report that claims that Apple is not planning to launch a smaller iPhone. However, they did report that Apple is planning on launching a cheaper iPhone.
In a conflicting report to the other various published reports, The New York Times has confirmed via their sources that Apple is indeed not working on a smaller version of the iPhone (or N97, iPhone Nano) as well as integrating voice commands.
But contrary to published reports, Apple is not currently developing a smaller iPhone, according to people briefed on Apple's plans who requested anonymity because the plans are confidential.
That said, the next-generation iPhone is "likely to be similar in size" to the current iPhone. Which make sense as incorporating a smaller screen would require app developers to rewrite their Apps to fit to the new resolution.
The New York Times' piece, however, did conform to some of the details spelled out by The Wall Street Journal's report. In specific, Apple is working on improving its' voice command system to allow easier navigation with the iPhone
Apple is also working on changing some of the internal components to reduce costs to possibly sell versions of the iPhone at a cheaper price.
"Although the innards of the phone, including memory size or camera quality, could change to offer a less expensive model, the size of the device would not vary," said the person, who has worked on multiple versions of the device.
Reports on MobileMe seems to be on par with the others, citing that MobileMe will be available for free and allow users to wirelessly access their photos and other media files online.
Source: The New York Times