Ladies and Gentlemen, the rumour mill is churning again, and it is not only the iPad 2 release which will be getting all the spotlight here. The latest from Business Insider says that Apple COO Tim Cook "strongly suggested" that we shall see a cheaper iPhone in the near future, contradicting a previous NYTimes report, claiming otherwise.

During an interview with Bernstein analyst Toni Sacconaghi, Cook says Apple is doing "clever things" to attack the prepaid market, because he wants Apple to be "for everyone," not "just for the rich." Cook also accepts "price is big factor in the prepaid market," but Apple is not "ceding any market," however, Apple's efforts can be marked by the fact that it is constantly making its niche in China, which according to Cook is "a classic prepaid market."
So as much as one wouldn't want to believe that we shall be seeing a totally touchscreen based, cloud storage touting smaller iPhone, it looks like there's some ground to these rumours after all, at least for now.
Sacconaghi also notes: Apple CFO Peter Oppenheimer says Apple does not want carriers to dictate terms, which according to Sacconaghi reinforces, "the notion that Apple might be willing to act to disintermediate carriers with a soft-SIM."