“In particular, the talk of a 4″ screen and rumors of an “edge to edge” screen resulted in this mockup by mjay2k which shows that a 4″ screen could fit on an existing iPhone 4 sized device by extending the screen to the left/right edges. Similarly a smaller iPhone could use the existing 3.5 screen in a similar fashion.”
I’m not really entirely sold on the possibility of an iPhone nano. But then again, Apple is a great innovator so I’d trust their call on this one. All we can do now is wait for the iPhone 5 announcement and see what they’re up to.