Apple Insider reports that, quote: 'extremely reputable sources', say that there is a 2nd iPhone on the Apple product road map still in 2007.

The 2nd iPhone is supposed to be simpler and cheaper than the currently available iPhone. It would be basically just a music phone.

I do not have to be sold on believing that this is Apple's next step. The current iPhone is not the ideal Christmas present.
It is too expensive and locked to AT&T. When the Holiday shopping season comes around it is also pretty much an 'old' product.

If Apple is able to release a smaller and cheaper iPhone (iPhone nano) in time for the Holiday shopping season that is sold unlocked, they could land the Holiday gift of 2007 easy.

See also our original coverage of the iPhone nano rumor.