Before iOS 5 was announced, it was perceived by analysts that Apple would make the iPhone 3GS non compatible with the next version of iOS. Yet when Apple announced the next version of iOS, the 3GS was not left out and instead will feature a fully capable version of iOS 5.

People have been begging Apple for a couple of years now for them to enter the cheap smartphone industry, similar to how many older Android phones are now available for free with a new two year contract. Apple’s cheapest iPhone currently is the 3GS on AT&T for $99 dollars. However according to a recent rumor, the iPhone 3GS could become a free phone.

From TUAW

The latest analyst to chime in on this topic is Mike Abramsky of RBC Capital. He predicts Apple will release a cheap iPhone model when the iPhone 5 debuts. It won’t be a new model, though. Instead, he expects the iPhone 3GS to be offered for free. Apple will also drop the price on the iPhone 4 to US$99, says Abramsky.

This comes after the rumros that Apple would be announcing two different iPhones in September.

Do you think the next iPhone release will have two iPhones? The 4S and 5? Or do you think the “cheap” iPhone will be the free 3GS alongside a $99 dollar 4 and a $199 4S or 5? Leave your thoughts below.