What's Macworld without rumors? According to an iDealsChina report, Apple will soon launch a Nano iPhone-or perhaps an iPhone Nano-- which purportedly is a smaller, cheaper version of you-know-what. There's even a photo of the Nano iPhone's case, which iDealsChina claims is designed by silicone-case designer XSKN.

The timing is certainly right for a hot iPhone rumor, particularly with the Macworld Expo in San Francisco just three weeks away. The iDealsChina story alleges that Steve Jobs will use Macworld to launch the iPhone Nano, which will have a touchscreen and camera, but no 3G. Of course, iPhone Nano rumors have been flying for some time now. PC World reported on similiar blogosphere musings way back in July 2007.

Who knows, maybe the alleged $99 iPhone at Wal-Mart is actually the iPhone Nano. Keep in mind, however, that Apple doesn't play in the tech industry's bargain basement -- note its lack of $500 notebooks or netbooks--and there's no urgent need for Cupertino to change its strategy now.

So we're taking the iPhone Nano rumor with the proverbial grain of salt. Apple officials, masters of Soviet-era secrecy, aren't talking.