iPhone Upgrades/Downgrades This Summer?

The Silicon Alley Insider is quoting some note written by an analyst saying that the new iPhones coming out this summer will be an upgrade AND a downgrade.

First of all, the $99 iPhone we've been hearing about - it seems like it will be a reality especially in this down economy.  Thankfully, though, it won't be in the form of the bogus iPhone Nano.  The iPhone Lite (which is what I'm calling it) will be the exact same size as the 3G with the same multi-touch capabilities.  However, it is not expected to have GPS or 3G capabilities.  The storage size may also be limited to 8GB.    The camera could also be less than 2MP (which would be surprising to me).  And finally, the data plan might be cut in half to $15/month and would probably have some kind of data cap.

On the flip side, the iPhone upgrade, which I'm going to call the iPhone Pro, is expected to come in 16GB and 32GB models in a similar $199/$299 price range the current 3G has.  The screen resolution might be upgraded from 480 x 320 to 720 x 480.  The camera should better than the current 2MP and should be able to shoot video.  If the megapixels are indeed upgraded it should also come with autofocus and a flash.  Speaking of flash, with Adobe Flash on the way for the iPhone the list of must-haves could be whittled way down with this new iPhone model.  Cut & paste, push notifications and stereo Bluetooth could all be implemented through software.

Now, if the iPhone Pro satisfies my list of must-haves the question is - will I shell out another $299 for a new iPhone?  All of those new features are very nice but I'm doing fine right now without them.  I think what could be the tipping point for me is if the new iPhone sports a new chip that would give it better graphics and animation, and therefore, better games.

Until an official announcement, however, all of this is really just speculation.