Oh no...
It depends what you get I suppose, but for that cost, it better have an inbuilt camera, pull out qwery, video phone capabilities, etc. with a massive screen.
Not good, not good at all. What happened to an iPod Nano with the innards of a 50 dollar phone shoved in? Where's the simplicity? This is not going to happen.
You heard it here first. There will be no camera, there will be no video conferencing. There will probably be some method of accessing iTMS, hopefully run by Apple so it only costs the normal amount to buy. There will be a slide out number pad.
The iPhone should be an inexpensive iPod with the ability to phone and text people, not just another expensive complicated phone with the ability to play music. If Apple wants to make something with a camera and stuff, fine, but they have to keep the simple model too!
How about a chunkier iPhone with a 100Gb HD? I'd be tempted...
These prices are much too high.
P.S. I see no reason why Apple cannot sell these for around the same price as a normal iPod. Basic phones are not expensive. The (pre-pay) phone I have now cost AU$40 brand new, unlocked, and came with $30 credit. It phones, and texts. I think the iPhone should cost no more than about $50 more than the iPod of the same storage.
If they want, Apple could replace the iPod Nano with the iPhone. It may be a relic from using such a crappy phone for so long, but the iPhone doesn't need to be special, as long as it is cheap, especially in the basic model.