Those are pretty much the feelings I had when they introduced the iPhone 3G (and had the nerve to leave unchanged for the 3GS). They went from a classy aluminum case with cool trim details like the black rubber around the mic/speaker, to cheap looking, scratch-prone plastic. I'm saying cheap looking because aluminum is associated with Apple's "Pro" products while black/white plastic is associated with the "I'm a poor student" products such as the white and black plastic MacBooks. I personally think this prototype has more sex appeal than the 3G/3GS.Still I think the most recent shots give a good enough image for me to be able to have an opinion about it, retouched or not. It could be pink for all I care, it's the unimaginative form, the bad fit, the lack of "I want to touch this so badly"-feeling that disappoints me the most.
As for the chrome frame, there's a possibility that it will live on. I saw a part in some Chinese photo of this prototype that looked suspiciously similar to the chrome bezel before it's been coated with chrome.
I just wish that people would take the engineering perspective into consideration in order to understand why the prototype looks as it does. Johnny Ive can't just draw anything he likes and then have people make that exact thing and stuff all the components into it. I personally think that this whole design was dictated by the use of zirconia for the back plate. Zirconia is very durable and scratch resistant and great for the wireless signal, but it's also an industrial grade thermal insulation material that would fry the insides of the phone unless there's another way for the heat to escape, and that's why they had to do this aluminum unibody type thing where the aluminum extends all the way to the border around the sides. I think they have to leave that border pretty much naked, if they cover it in too much bling/chrome/plastic/whatever it might result in overheating issues (the 3GS is known to get smoking hot and it's not like an even faster processor will run any cooler). The battery gets pretty hot while charging, too. Imagine the headlines if the iPhone 4 turns out to be prone to overheating and exploding, and hospitals are crammed with people waiting to have zirconia shards removed from their eyeballs...