@ milani,
I totally agree with what you said. If I didn't come out clear as to mean that I strongly believe that there already is a strong,steady non-smartphone market then please forgive me. I totally agree with you, and everything you said. It all makes sense, I see the only reason apple would even want to enter the non-smartphone market would be to please others that are Apple Fans. I mean if people are asking for an iPhone without a required data plan, then they've got plenty of options. LG has just recently released several touchscreen-based phones One of which is the LG view, the other I cannot name because I don't know it (sorry).
My point was though, when and if both markets for the iPhone AND the non-smartphone slow down then Apple should jump in, this is when they could "sweep" the market as they have done before. Apple is known to be "revolutionary" and typically they do this with mobile devices when they're down in the markets.
What I am trying to get around to is that, I do believe an iPhone Nano maybe should be released, only when the markets are down. Other than that I see no point in it, especially in these economic times.