Smaller ‘world’ iPhone on the way?

It is possible that Apple has contracted to produce a smaller iPhone with a 2.8″ screen that can be used on multiple carriers in 2010. Reports are starting to come in (lots of detail at AppleInsider) which seem quite credible at this time and this would be an unusual move in a market that seems to be moving towards larger handsets with bigger screens. However, since when does Apple follow the crowd. I do hope that this is just one iPhone update because it would be nice to see something more radical appear early next year to keep the buzz going, and to keep the competition innovating.