Also, people saying that the App Store won't work if they don't keep the resolution are wrong. The store is an online service, and can selectively show applications if they can run on the phone. Just like the iTunes store doesn't show french songs on the american store. If it uses the same system, developers will simply need to tweak their interfaces to get it to work. It would be a 5 minute job. There's very little code that needs to be modified (in fact, with Interface Builder, you might not even need to change any code).
Yes and No. Yes if all your app does is use interface builder and system stuff; No if you've coded a game... Changing the screen resolution can be a big deal with dedicated things like games if you didn't think about it when you first started coding the thing.. If you knew from the beginning that the resolution could change you would code some flexibility into it, but if you fixed all your code (not to mention graphics!) into a 480x320 resolution thinking (quite reasonably) that it wouldn't change, you could potentially have a whole world of hurt ahead of you trying to change it....
Certainly do-able though; and obviously all new games/apps would be coded to allow the new screen size, assuming apple don't just keep the same resolution but squash it into a smaller space.
If the iPhone Nano is real though i just don't get it.... perhaps i missed a meeting but i've heard a thousand (well, it seems like a thousand) people say things like:
"it should have a better camera",
"it should have a camera flash",
"it should be able to record video",
"it should have SMS forwarding",
"it should have MMS",
"it should have cut and paste",
"it should have cut and paste"..... etc etc...
yet, I have NEVER heard anyone say "it should be a little smaller".....!!
🙁