Corroborating with previous reports, the low-cost iPhone is said to be the iPhone 3GS that will be sold for $350 off contract. Given that the 3GS is old news and outdated by now (it will be 2 generations old when the iPhone 5 is released), Apple should have no problem selling it at low prices, since it will cost cheaper to make as well. With a range of differently priced iPhones, this should give Apple consumers more devices to choose from when picking out an iPhone, which should give the company an answer to low-priced Android phones.
source: Ubergizmo
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