There has been some gossip and a few rumors recently about a mini iphone 4 being in the pipeline. It is expected to be much smaller than the iphone 4S by about half the size.
The phone would include a touch screen that would fit tight to the edges, and a virtual keyboard incorporating a voice recognition system.
This small phone would be much cheaper than the 4S at half the price which is on sale for $200 including the 2 year contract.
I have just recently found out that the mini iphone 4 would have very little integrated memory, this means it will cost alot less than the full sized models.