It's been a while since we had iPhone Nano reports, but since the 3G has come out, the UK's Daily Mail is the first to have something a little more concrete than pure speculation:
Apple to launch the iPhone 'nano' in time for Christmas
It says O2 will have it for Ł150 ($296 US) for pay-as-you-go customers.
So, how would that translate to AT&T in the states? I can see the price staying about same - $299 for the device, but you pay month-by-month with no contract. I can see a LOT of people loving this.
But, with the flexibility of having no contract, which features from the iPhone 3G will the iPhone Nano NOT have?
The only thing I didn't like about the Daily Mail report is the idea of a touch wheel on the back and the normal display on the front.

That just seems WEIRD.
Well, first of all, it's probably going to be smaller given past reports about a smaller form factor on the horizon:
Is This the New iPhone’s Touchscreen?
If the iLounge report (with picture) is to be believed, then the Nano will sacrifice about a half inch off the current screen size. Not bad.
I'm guessing the Nano will NOT have GPS. That's an easy one to scratch off.
The Nano should probably come with a camera, since that's a given on most mobile phones these days.
Perhaps no native iPod functions? That would make it easier to still market the 32GB iPod Touch. If there's no iPod on the phone, then I can see a 4GB or 8GB model.
Although some reports have said that the Nano would NOT have the internet, I highly doubt that. Perhaps not 3G speeds though. Maybe EDGE speed with the same current battery. That would solve battery problems for many users. Wi-Fi is a given.
So, with the internet you can still stream video and music although probably not at 3G speeds.
I'm sure Nano owners will still have access to normal App Store apps.
I'm also guessing with LESS features the software for the Nano should be more stable than the 3G. And that's just a guess.
So, my guess for the Nano - No GPS, no iPod, no 3G. About the same price as a 16GB 3G ($299) but with no contract. I can even see the price being even lower like $199-$250 since there could be no GPS and 3G radios in them.
What do you think?