Lots of rumors of a larger iPhone platform, or, moreso perhaps, a larger iPod Touch platform. Basically something along the lines of the Nokia internet tablets, but running the iPhone platform.
Effectively more a portable infotainment system, due to it's restricted input capabilities. (Notably it's not a spectacular text input device with it on screen keyboard.)
But it has enough capability for the random email, and for surfing the web with ease.
Whether the new device would have a phone built in to it is a question.
On the one hand, it should, because one of the real benefits of the iPhone is (mostly) ubiquitous connectivity, and with 3G it will be even faster. It can rely on WiFi, but that's just not the same as the "everywhere" nature of the cell systems (with "everywhere" being loosely defined).
On the other, it will likely be "too big" as a phone, unless you use it soley through a remote headset.
What we have learned, though, as we fight user interface and form factor issues, is that the power of the handheld device is not self-contained, but in it's connectivity to the larger grid.
In association with that, there's less necessity for a handheld computer to be performant. Rather, the demand is that the computer have a fast connection to a fast computer, rather than the handheld itself be powerful.
The primary driver for faster handhelds is, as ever, games and UI experience. A faster computer will be able to voice recognition, perhaps, better than a slow computer.
Finally, for most consumers, the home computer has "topped out", save for the graphics card if you're a gamer. I have a Mac Pro, and I sincerely hope to not have to replace it for 10 years. My wife has a 5 year old Mac iBook, which is just marching along. Only thing we do to that is upgrade Firefox.
Meanwhile, we're pushing the envelope on performance, battery life and form factor in the handheld space.
The Asus EEE mini notebooks on the one hand, and the iPhone, "smart phone" platform on the other.
