If that's really true, it'll be a huge failure. Not because the iPhone is oh-so-great but because no one would ever need this. Who would buy a possibly stripped down Android clone, if the real Android phones are everywhere?! Also they'd be extremely late to the party.
Just a thought: They'd need their own app store too if they don't want to use Google's services. And where's Facebook Maps or would they use Bing? And there are so many other services they don't have (Calendar? Outlook Sync? a proper mail server?)
The Facebook brand alone and some kind of seamless integration plus whatever specific features they can think of would make it work.
BUT, you can now have the same on Android, iOS and pretty much any popular mobile OS, so there is no point in spending resources for this.