Apple is poised to release an 8GB version of the iPhone 4, according to a Reuters report that cites "two people with knowledge of the matter".

With all the iPhone 5 rumours flying around, there has been a growing murmur that Apple may also release a cheaper iPhone at the same time.

And whilst Pocket-lint can't see Apple cheapening the brand by scaling down the spec sheet, it is reasonable to accept that the Cupertino company may offer a cut-price iPhone 4 with less storage to sit alongside the next-gen iPhone.

After all, unlike the original iPad which was effectively killed off when its sequel came along, Apple has continued to offer the 3GS alongside the iPhone 4. So a scaled-down fourth-gen iPhone would sit nicely in the device hierarchy.

It's a much more realistic prospect than Jobs taking to the stage, announcing a new phone with shiny bells and whistles and then offering an entirely new, but inferior, model at the same time.

Reuters' sources claimed the 8GB flash memory was in production in Korea and one source also waded in to the ever growing iPhone 5 (or 4S) rumour pile with promises of "a bigger touch screen, better antenna and an 8-megapixel camera".

An official Apple announcement is expected in September. Expect a few more twists and turns on the rumour path before then.

In the meantime, check out our Apple iPhone 4 review

And check out iPhone 5 - true or false?