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Will Santa's stocking hold a new iPhone Nano?

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O2’s pay-as-you-go customers could find a remodelled iPhone under the Christmas tree this year, according to the latest word on the grapevine.

An industry source has told the Daily Mail that a “nano” version of the iPhone is expected to be unveiled by Apple in time for Christmas.

Although the report said nothing about where its source gained such valuable information from, “one expert” has also told the newspaper that the so-called “nano phone” could have a touch-wheel on the back and a display on the front, enabling numbers to be dialled from behind.

The industry source labelled the new phone as “the big one” and the report said it's likely to cost around £150 (€200/$300), a price-point that would make the handset very appealing to cash-strapped iPhone fans reluctant to sign into an O2 contract.

Several other iPhone rumours have hit the headlines recently, since the launch of the 3G model. These include talk of a charity edition red iPhone and speculation about network operator Orange being brought onboard to offer the handset alongside O2.

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