Rumours of a pint-sized iPhone have cropped up before, but the latest mutterings are more precise than ever. According to a British newspaper, Apple will launch the iPhone nano just before Christmas.

According to the Daily Mail, the smaller, cheaper handset will sell for £150 on pay-as-you-go contracts, and will be ideal gifts, since there’s no need for a credit check.

The paper also claims the new iPhone nano will have a large display on the front, and a click wheel on the back.

What do you reckon? Is this the reason we haven’t seen pay as you go pricing for the iPhone 3G yet? Get involved in the comments section below.

TBC | £TBC | Apple (via Distorted Loop)