As early as last year rumors of an iPhone nano surfaced, and they were repeated in August of this year. They're baaaaack, this time prompted by a post on iDealsChina which purports to show an iPhone nano case.iDealsChina says the above shows an XSKN case vs. a iPhone nano version of the XSKN case.
It is the same height as the just release Nano but wider and thicker and with the same iPhone 3G contours. It has 3 sensors, camera, ...

With Apple and Google's on-device application stores already peddling the wares and RIM's