iPhone Nano Concept

The Wall Street Journal's Yukari Iwatani Kane continues to leak Apple rumors, this time backing up Bloomberg's iPhone nano story and once again raising the idea of a revamped, free MobileMe service to go with it:

One of the people, who saw a prototype of a new iPhone several months ago, said the new device is intended to be sold alongside the current line of iPhones and would be about half the size of the iPhone 4. The phone, one of its codenames is N97, would be available to mobile carriers at about half the price of Apple's main line of iPhones, the person said.

Apple also is exploring a major overhaul of its MobileMe online storage service, the people familiar with the matter said. The service currently requires an annual subscription payment of $99 to $149. Apple is considering making Mobile Me a free service that would serve as a "locker" for personal memorabilia like photos and videos, eliminating the need for consumers' devices to carry a lot of memory, the people familiar with the situation said. MobileMe could become a focal point for an online music service that Apple has been developing for more than a year, the people said.

TiPb took a look at the idea of growing the iPhone and iPad families earlier in the week and nothing here changes the balance. Apple already offers several versions of MacBook Pros and iPod so several versions of iPhone and iPad can never be off the table. What if any compromises Apple is willing to make, especially when it comes to app compatibility, remains the question.

Free MobileMe, on the other hand, could prove essential in matching free services from Google and Microsoft and paving the way to a universal Apple ID for cloud content, sync, and backup. (We can dream right?)

UPDATE: The WSJ has updated their post with info on wha

So now that the Verizon iPhone is off the rumor plate, you have any room left to believe in an iPhone nano?