It's been rumored that Apple may be releasing an alternative, possibly smaller, iPhone form-factor to expand its iPhone lineup. There's been rumors for a while about iPhone Nano, but it looks like it may become a reality.
There was speculation that the iPhone Nano, would be announced at the MacWorld eXpo 2009. But, due to Steve Jobs pulling out from the convention, ruined all hopes for his traditional product-launching keynote, the iPhone Nano will likely launch in the months following the January convention.
via:Apple Supply Chain Checks Show New Cheaper iPhone, Shuffle, MacBook Coming - Seeking Alpha