Is a Smaller iPhone on the Horizon for Verizon?

The rumor mill's cranking up once again about that smaller iPhone, and this time the story goes that it will have a 2.8-inch screen instead of the current 3.5" display.

Apple Insider reports the unconfirmed report from an industry analyst that Verizon Wireless will be rolling out this new iPhone in the third quarter of 2010.

The upcoming handset will allegedly use a dual-system chip from Qualcomm, able to operate on both GSM/UMTS network of AT&T and T-Mobile as well as the CDMA network of Verizon and Sprint. It's an intriguing rumor, but a lot can happen in nine months.

And what about all the bad blood built up between the two companies from Verizon's iPhone attack ads? Water under the bridge, according to Apple Insider.

Verizon's merciless attacks on AT&T's 3G network coverage in ads spoofing the iPhone's "there's an app for that" slogan were another factor which left some observers to think that Verizon could not possibly be in talks with Apple to sell the iPhone anytime soon, but the OTR report indicates that Verizon and Apple have already hammered out an agreement to sell the new iPhone model within the year

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