As rumors of an iPad Mini have picked up steam in recent months, there has been little attention paid to the other long-rumored but never appearing shrunken iOS device: the iPhone Nano.

Well, that has changed today as the first fresh rumor of the iPad Nano in quite awhile surfaced today. According to China Times (Google Translation), Apple is planning to produce a iPhone designed to compete in the low-end smartphone market. This phone will be smaller and cheaper than the standard iPhone, and will, the report says, be launching later this year. There are no other details about the device, and no source is cited in the report.

The iPhone Nano is one of those rumors that has been around for ages but never amounted to anything. Kind of like the Loch Ness monster. Or Bigfoot. Or the end of the world. Or… well, you get the idea. There has been speculation that Apple would produce a smaller, cheaper version of the iPhone going back at least as far as the iPhone 3G. Interestingly, those rumors have been pretty quiet through the last couple iPhone cycles. It seemed almost like the rumor mill had given up on the idea.

The odds of an iPhone Nano ever actually seeing the light of day are pretty slim. A smaller iPhone screen would fragment the platform, causing headaches for developers who would have to start designing their apps for smaller, lower-resolution screens in addition to those on the iPhone, iPod Touch, and iPad. Besides which, Apple already has a pretty solid strategy in place for targeting the low-end smartphone market. With every new iPhone launched, the earlier versions become cheaper. When the iPhone 4S launched, the iPhone 4’s price dropped significantly, and the iPhone 3GS became free with a two-year contract.

So, to sum up: is it possible that Apple could have an iPhone Nano in the works? Yes. Is it likely? Definitely not.

What do you think? Should Apple make a smaller, cheaper for the low-end market? Would you buy an iPhone Nano? Let us know in the comments.