iMore heard back in March that the iPhone 5 was on track for an October, 2012 release and would include LTE networking and a new micro-Dock connector. We later heard there were several prototypes in play, at least one of which had a 3.5-inch screen like previous models, and one which had a 4-inch 16:9 screen. Due to Apple's logistical agility, they had until July to decide which version to go with. Now, according to Macotakara -- which has provided reliable information in the past -- Apple has made their decision.
My reliable Chinese sources told that, new iPhone has started manufacture phase
It sounds like the 4-inch, 16:9 iPhone is the one going ahead to manufacturing, and in a design similar to what iLounge predicted back in May.
There's still a lot of time between now and October, and Apple has been able to make changes to previous generation devices in a matter of week. Producing millions of devices to meet the kind of demand a new iPhone generates is non-trivial, however, and given the amount of parts and case leaks seen to date, things might just be locked and loaded now for the fall.
The new iPhone will launch with iOS 6 and likely reveal new features to go alongside the new hardware. Based on past history, it's possible to make some guesses about what those might be, but we won't know for sure until Apple announces the 2012 iPhone event and Tim Cook, Scott Forstall, and Phil Schiller hit the stage.