The never ending rumors of this Fall’s iPhone launch continue to pour in. One rumor that has been prevalent for years is that of the fabled “iPhone nano/mini“. People have been asking for a cheaper and perhaps smaller offering in Apple’s iPhone lineup. To me, it never made sense. Part of what makes the iPhone great for developers to make apps for is in its uniformity. All models have the same screen size, layout, etc. All of them have mostly persistent data connections, and that gives the ability for apps to use data in many ways. A smaller and cheaper device may disrupt that and cause issue. But this latest rumor gives a feasible way to include a “baby iPhone” without any disruption or problems.

A contract-less $350 iPhone 3GS could spell the savings that many customers crave. The ability to go without a data plan gets easier and easier each year as more and more places add public wifi. That lower monthly cost could be what Apple needs to entice even more people to buy into iOS. After each recent iPhone launch, Apple has kept the old model on sale at the lower $99 price point (now $49 for the 3GS). They couldn’t keep the old 3G around after 2 years because it wouldn’t be able to run the latest firmware (iOS 4) with all the new features. But this year, the 3GS can run iOS 5 with all the highly touted new features, and so it is feasible to keep it around for one more year. The iPhone 4 will most likely fill the $99 spot come this August or September.

BGR has been given information from an “incredibly solid” that these rumors are true.

According to our source, Apple will indeed be launching a prepaid / lower cost iPhone this year. We are told the handset will retail for no more than $350 without contract. Ready for the really interesting part? It’s entirely possible that the low-cost iPhone will in fact be the iPhone 3GS.

[BGR]

This could be the first three model iPhone lineup we’ve seen from Apple. The waiting continues to see how this all pans out.