I think if Apple ever does an iPhone Nano it will be more of an extension of the current iPod Nano than a smaller version of the iPhone. It would be difficult t

I think if Apple ever does an iPhone Nano it will be more of an extension of the current iPod Nano than a smaller version of the iPhone. It would be difficult to scale the iPhone UI/apps down to a physically smaller screen without usability problems. I imagine they would only go this route if iPod sales really plummeted due to convergence of media players in phones. It might be a compelling device though with an iPhone-ish UI and some simplified widget style applications.