When it comes to the fifth-generation iPhone, you have two camps: those who think Apple is going to do a major design revision and those who don't.
For the moment anyway, the rumor mill is tilted toward the latter camp, as Taiwan-based Digitimes is claiming that Apple has slowed production of the iPhone 4 as it gears up to produce an upgraded--but not significantly redesigned--iPhone 4S.
The Digitimes report follows on the heels of a Reuters post that claimed that the next iPhone "will look largely similar to the iPhone 4" and that production for the new iPhone would begin in July (Digitimes has it pegged for August with a September ship date).
Virtually everyone expects the next iPhone to have an A5 processor and an improved 8 megapixel camera while the majority of iPhone watchers doubt the fifth-gen iPhone will offer support for 4G (LTE) networks. However, some think it will be a "universal phone" that includes support for an expanded array of networks, including T-Mobile and Sprint.
According to 9to5Mac, Apple has seeded prototypes of the next iPhone to developers, with anonymous sources saying those prototypes look like the iPhone 4 (one called it the "4S"). Of course, this doesn't mean anything, as Apple is more likely to send out the new version of the phone (with the new A5 processor) in an iPhone 4 casing in order to avoid any leaks about design changes.
Logically speaking, Apple would actually call its next-gen iPhone the iPhone 5. It is its fifth-generation smartphone and it will be paired with iOS 5, which is due to be revealed next month at Apple's Worldwide Developers Conference (WWDC).
In naming the second version of the iPhone 3G the 3GS, Apple was arguably making a course correction as that model was technically the third-generation iPhone. That's why, when all is said and done, we take all these rumors with a grain of salt.