Cheap iPhone in the works ?

Bloomberg has reported that Apple is working on releasing a smaller and cheaper version of their iPhone 4, which will be sold at only $200 without a contract

The upcoming device is supposed to be 1/3rd the size of the original iPhone 4 and probably won't have the retina display with it's smaller screen considering the dropped price.

Considering that you wont have to commit to the 2 year contract the device would be a very sweet deal for new adopters. The source has reported to Bloomberg that this device will have dual support for both GSM and CDMA.

This device would make a lot of sense considering that Android devices are able to reach a wider audience being offered in various sizes and configurations.

Apple's iPhones considerably cost much more which would make such a device reach a larger audience. Apple however is known to work work on items they don't release so this device would probably never see the light of day. 

source - Bloomberg