I think it looks like a doctored iPod Nano. The original story to go with the photo is here
Here's an interesting quote from the arcticle:
Apple's eagerly anticipated 'iPhone' may have made an unscheduled appearance in public this week - on the front page of a Paris newspaper. French publication 20 Minutes on Tuesday splashed a picture of the device on an edition of the paper timed to coincide with the opening of Apple Expo Paris.