It started as some leaked photos from a "lost" prototype found in a bar, but now Gizmodo is claiming the exclusive over Engadget's spy shots from the weekend having got their hands on the device for further examination, some photos and a video.

Although the device doesn't work enough to actually be a running handset, it does shed further light on what is expected to be the new iPhone rumoured to be scheduled for a June launch.

Details include a improved camera, micro SIM slot similar to that of the iPad 3G and a new and improved screen although details to its resolution are still to be worked out.

The device, which is looking more and more like the real deal offers the following specs according to Gizmodo:

• Front-facing video chat camera
• Improved regular back-camera (the lens is quite noticeably larger than the iPhone 3GS)
• Camera flash
• Micro-SIM instead of standard SIM (like the iPad)
• Improved display. It's unclear if it's the 960x460 display thrown around before—it certainly looks like it, with the "Connect to iTunes" screen displaying much higher resolution than on a 3GS.
• What looks to be a secondary mic for noise cancellation, at the top, next to the headphone jack
• Split buttons for volume
• Power, mute, and volume buttons are all metallic

Adding fuel to the suggestion that the leak of the iPhone 4G might be a little "accidentally on purpose", the company's SVP of industrial design, Jonathan Ive, has supposedly tweeted "This isn't good", although we are awaiting confirmation as to whether that really is Apple's lead designer's Twitter account.

 Back in January, before the release of the iPad, a former senior marketing manager at Apple, John Marellaro, told Mac Observer how the company loves controlled leaks - dripping out little titbits of information about new products for a whole host of reasons as diverse as gauging consumer feedback to getting bums on seats for launch events.

Meanwhile, John Gruber of Daring Fireball reckons that Apple considers this device stolen, rather than lost. The new handset was hidden in a "fully developed plastic case to house this phone to disguise it like a 3GS," claim Gizmodo. Rumours amongst journalists suggest that the gadget site paid over $10,000 for the device.

Some people still suspect it might be a fake, but if the evidence is accurate then it seems unlikely that's the case. What it may be, however, is a prototype handset, though the design is rather polished for that. We'd love to hear your take on the video above and the multiple images on our roundup of the coverage - tell us what you think below.

Update: The Twitter account is fake.