As with the iPod before, iPhone shall have a smaller sibling.....really?

So just the same as the iPod had the iPod Mini, and then Nano, the iPhone will too! Or so it is written. The rumours surfaced a couple of weeks back, but until now there has been no concrete evidence of an iPhone Nano. But is it really true? So far I've seen a case mock-up diagram, and two supposed pictures of what the real thing looks like.....which is a bit confusing considering they look different?

The first photo i saw yesterday is probably just a hoax. But it does look mighty fine though.....probably because it just looks like someone photo shopped a picture of an iPhone 3G and made the "Nano" the size of the supposed case from the mock diagram.



The second picture i saw is actually from the manufacturer of iPod and iPhone cases, XKSN. So this is more than likely the real deal. Somehow not as flashy as the "photo shopped" one but i would still buy one....considering that its going to be sold at $99...or so the rumors said.The big issue with a Nano would be compatibility. The device is smaller, and probably has lower spec components than the 3G and some apps might not function as well. Screen size might also be an issue if the Nano has a lower resolution. But with Apple being Apple, I'm sure they'll work something out. Maybe a special Nano section in the App Store? That should ehm...separate the men from the boys, right?