I actually think it looks better than the current/previous iPhones, because the back is made of one piece instead of having various materials and the rounded edges. I know the 3G/S had a similar back but it was bulky and fat, this seems to be a lot slimmer.
I'm wondering what will be the difference between the low-cost iPhone and the normal iPhone: retina? CPU? Camera?
Surely they wouldn't go with a much slower CPU, as Apple doesn't tend to release a product that has sub-standard performance, and the iPhone 4 is starting to be slow in that respect. So they'd have to go with a CPU that's just one year old, which isn't a big difference.
As for Retina, wouldn't it make sense for Apple to start transitioning everything to retina? Even the iPod Touch got it, so I'd guess the low cost iPhone would also have it.
Camera? I'd imagine that a lower-megapixel camera would make sense, but once again, as long as it's at least the quality of the iPhone 4, it should be good enough.
So then what justifies the low cost iPhone? Why does it "deserve to exist"?