A small observation - another of the flood of features in iOS 5 is the ability to set up an iOS device without a PC. Easy to mock, this - Nokia (and Android) never needed it, but iOS did, until now.
Why now? Well, a huge chunk of smartphone share is being taken by Android devices selling for $200 or less at wholesale. Indeed, you can now pick up a decent Android device for under $100. It is entirely possible that Apple is looking at this market. There are big problems in addressing it - far bigger than making cheaper iPods. How does Apple make a $200 phone that doesn’t cannibalise the existing $600 product, yet runs all the same apps?
But an issue in addressing this market is that many of these people don’t have a PC. A year ago Flirtomatic did a survey of its user base in the UK - 25% had no other form of internet access beyond their phones and another half had to use shared PCs (work or internet cafes). A lot of people can’t use iTunes to set up their new Apple device. Well, now they don’t have to. And that means the iPhone Nano is a step closer.
In other words, iOS 5’s ability to set up an iPhone with no PC is a precondition of selling an iPhone Nano: many of those buyers won’t have a PC