Engadget is now standing firm behind those images of an "iPhone 4G" they posted yesterday, claiming pictures they nabbed right before the iPad launch as proof it's not just a knock-off. And what's more:

a source -- who confirms this is the next Apple iPhone -- also tells us that the device apparently does have a higher res screen on-board, a front-facing camera, a higher resolution camera with flash, and takes MicroSIM cards.

Not only that, MacRumor's forums claim to have pictures from a Chinese website showing the guts of the device.

We're still saying it can't be called an iPhone 4G, since Apple used iPhone 3G for the 2nd generation due to its 3G radio, and likely would do the same for an iPhone 4G, signifying a 4G LTE radio -- which won't be supported in the US until 2011 at the earliest. iPhone HD is still a candidate, however, due to the higher resolution screen.

Now this still looks so different, so cobbled together that, if it does indeed come from Apple's labs, it's more likely prototype hardware than finished design -- a way to test the guts of the machine and how it works with new software features.

UPDATE: Daring Fireball claims to have called "around" (read: into Apple contacts) and now believes:

this is an actual unit from Apple — a unit Apple is very interested in getting back. I am not certain that this is the actual production unit Apple intends to ship to consumers. I think it’s a testbed frame — thicker, with visible (un-Apple-like) seams, meant to fit in 3GS cases so as to disguise units out in the wild. It’s hard to tell from the photos. But I think it is the real deal in terms of the internals and display being next-gen iPhone hardware, and the new glass back. A front-facing camera and 960 × 640 display are two things I know are slated for the next iPhone. (The “80 GB” of storage sounds like a mistake to me, but who knows? SSD storage typically comes only in even power-of-two increments.)

Either way, given the blogsphere reaction, it sure does take attention way from what Android and Verizon are getting ready, doesn't it?

Given the differences between it and current iPhone models, do you hope this is the direction they're actually going, or that the final iPhone 4G looks nothing like it?

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