This does sound pretty logical. Upgrade the data speed, and then turn around and upgrade the capacity next year when the higher density NAND flash chips become available (to enable 32GB). Especially if the unit is somehow thinner - they probably wont have the space on PCB for another two flash chips to get up to 32GB.
They dont want to put out the perfect hardware immediately, then you wont have reason to buy the iphone again in a year when they upgrade the capacity. Also why the chip they're planning doesn't have HSUPA for fast uploads. They can introduce direct youtube video uploads then.
I sure as hell hope the iPhone 3G is firmware upgradable to HSUPA. I mean HSDPA is great and all, but it only speeds up the downlink side of the connection. Also, in addition to just pure throughput, HSDPA and HSUPA vastly reduce the connection latency from 300-500ms each way to ~75ms. If anyone doesn't know what the **** all this nonsense is that i'm talking about, I made a chart yesterday for Appleinsider forum, so i'll post it here too:
As for 32gb chips, they already have compact flash in these sizes. I'm not sure about how small they need to be for the iPhone, but it shouldn't be long before these sizes are able to fit on one chip. Definitely possible in the next few months given the speed of flash memory development lately. It makes a lot of sense to drop the 8gb model, especially with memory prices coming down so much lately. What really counts in the next iPhone is the amount of RAM installed. At least 512mb is a must or we will keep seeing frequent app crashes. This would also allow SDK apps to run in the background.
Anyone think they will incorporate Intel's Atom 800mhz 80milliwatt idle / 0.65w under load chips? That would totally kill everything. Although I think only 2/3, at best, of the things I've mentioned will make it into the shipping product. Thats how it always works, in the best case scenario at that.
I doubt they change any of the core hardware, such as the 128MB RAM, the ARM processor with graphics chip, etc. Having two different performance capabilties in the wild would make it a major pain to develop on the platform. Think about a game developer tuning the game to have the best graphics while at the same time keeping an accpetable framerate.... If they change the 3G iphone, then you'll have to optimize the game for two different hardware profiles and capabilities. Increasing the RAM would have less of an undesirable effect, but I still bet Apple keeps system-spec parity with iPhone 2G.
Swapping an ARM11 for the Intel Atom is totally out of the question. First of all, the current Menlow platform is way to big and power hungry for a cellphone. The second gen Atom platform, "Morrestown", a "system-on-a-chip" may lower power requirements enough to be used in an iPhone, but that won't be out for at least another year or two. Also, the same problem applys with maintaining two code bases and platforms for ARM and x86.
If they don't have a 32 GB I am going to be so PISSED

I'd pay $599, I don't care!
AMEN AMEN AMEN!!! If AT&T pulls some crap like that of raising the plans because of 3G I'm pretty sure I will erupt in absolute furry. They need to not only keep pricing the same but they should lower their plans. From what all my friends have on other networks AT&T seems behind on pricing, not to mention the networks we have in this country are crap anyway so what exactly are we getting raped for??? Same goes for internet in the USA
First of all you should relax. lol. Secondly, don't expect AT&T to LOWER their plans while UPGRADING them to 3G. They already have very competive prices on the iPhone plans. I don't know what carrier your friends have, but Verizon is certainly more expensive for the same minutes plus unlimited internet (aka 10GB or whatever). Adding unlimited to any regular phone plan is $49.95 more as of a few months ago, not sure if it has changed since.
A few days ago, I came across some information on AppleInsider regarding a forward-facing camera on the 3G iPhone. I'm on an iPhone right now, so I can't link to the page, but it detailed how hundreds of micro-cameras would be meshed with the LCD display. The cameras would each take a portion of a picture, and then software would price the mini-pictures together to create a full picture. The patent for this came about 3 years BEFORE iphone's introduction, so perhaps they would build this into the 3G iPhone. It would be great for corporate users, so they could hold video conferences wherever they are. Lately, Apple has been taking on corporate users, so who knows? I think it's a great idea.
That sounds like cool technology, but it obviously sounds expensive, hard to manufacturer with ow yields, and just way to complicated for something so simple. Most decent 3G phones in Europe and Asia have dual cameras. You get a 2-5Mpixel primary on the back and a small 0.3Mpixel (640x480) forward facing camera for video chat. I hope the iPhone FINALLY popularizes this functionality in the USA.
what i hate most about my iphone is that i am so afraid of slipping it away... the aluminium is just so slippery. if u are walking downstairs and are in a hurry it might happen really easily. maybe they could give the metall more texture.
Get a rubber case.. they work great, look good, make it easy to hold onto, and there are literally hundreds available..