Apple working on smaller, cheaper iPhone?

According to Ben Patterson on Yahoo's "Today In Tech", Apple may be coming out with a new, smaller and cheaper iPhone. The phone is said to be 1/3 the size of the current iPhone and may cost around $200 without a contract.

I think it'll be interesting to see just how small cell phone makers can go and still have a usable product. It got me thinking of a skit I saw years ago. I had to do a little searching, and the quality is awful, but watchable. Enjoy Will Ferrell:

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