An 'iPhone Nano' on the Way?

As all rumors are these days, it's probably partly true and largely inaccurate. Yet, the UK's Daily Mail reports:

Apple is about to launch a 'nano' version of the hugely successful iPhone. It is expected to be in the shops in time for Christmas.

The product will be launched in the UK at up to £150 for pay-as-you-go customers by O2, the mobile phone group owned by Spain's Telefonica. 'This will be a big one,' said an industry source.

There's no detail generally beyond this and no identification of sources. It's intriguing to consider what an iPhone Nano might look like or how close it would be to the iPhone itself in terms of features, etc. Right now, however, it's just fun speculation.