Is an iPhone Shuffle in the Making?

Amidst all of the 3G Rumor Bonanza, an interesting nugget of thought popped up over at Macenstein. No, they didn’t jump on the blogwagon and predict the release date of the 3G iPhone. Instead, they predicted that an iPhone Shuffle would be released.

According to their tipster, the “engineering and development is basically done” and that it comes in a slimmer and thinner form factor, but get this, no video playback. I'm not so sure of an iPhone without video, it kind of steps away from what Steve Jobs envisioned the iPhone to be--a multi-tool for the future. No video? That's too 2004 for my taste.

But it does raise an interesting point: there may be a market for a tier-ed iPhone lineup and Apple should capitalize on it. Much like how Apple introduced the iPod first than came along with the mini, nano, shuffle, and touch. Could Apple effectively tier their latest toy? What do you guys think? iPhone nano fatty perhaps?