if you can't afford an expensive contract, you have 2 options:
1. buy a PAYG phone + iPod
2. buy the iPhone without a contract for $400-$500 (buy from craigslist/eBay)
3. don't buy it. an iPhone is a luxury. i want a ferarri does that mean i should go bitch and cry telling them to make a "take down" version of their car?
"ya hi, can you guys build a ferarri for the less fortunate people, like myself. same style/build, but put in a crappy motor and watered down features. i don't care, i just want a ferarri cause it's cool"
do you see where i'm going? either way, you're going to spend roughly the same amount of money.
do you think an iPhone nano would solve your problems? do you really think Apple is going to release an iPhone nano and price it at $100 so people can afford it? sorry, i like Apple's products but that's not how that company works.
plus, a phone the size of an iPod nano? please please please get your head checked. i'll pay for any medical bills.
after this post, i hope you realize how stupid this idea is.