I made this last week:
Here's my take on what the iPhone nano will be like when it comes out.
(Please excuse the fact that this image is in reverse, as my digital camera isn't with me now, so I used the built-in iSight to take this snap of my drawing.)
Take the existing look of the iPhone, same 3 sensors, same materials, same glass front, same aluminum back with chrome Apple logo, and the same black plastic bottom to cover the antennas.
Now, remove all 5 internet functions; stocks, maps, weather, Mail and Safari, and reduce the size of the screen from 3 1/2" to about 2 3/4", and reduce the size of the phone accordingly. As the screen is smaller than the iPhone, and it's not a smartphone, it will NOT have a QWERTY keyboard, but rather a T9 software equivalent like the Prada phone has. And you still have room for two more icons in the future, a games icon etc.
Some people say the iPhone is not a "smartphone", well the iPhone nano is definitely not a smartphone. It's an iPod that can make calls, send texts, and take snaps--all with a cool multi-touch UI under a full screen of glass. Oh, and yes it does video. 4GB and 8GB versions which should retail for about $349 and $449 respectively.