The long rumored iPhone nano could be on the verge becoming a reality, according to a rumor out of Taiwan. Moreover, reportedly smaller version of Apple’s world changing smartphone will pack quite a wallop as it’s expected to bridge incompatible CDMA and UMTS wireless systems, raising hopes once again of the iPhone coming to Verizon.

It seems that nothing, not even a tenacious worldwide recession, can keep the smartphone market from growing and the Apple portion of it from growing even faster than the overall niche.

With the world going mad, mad, mad for the Motorola Droid and HTC Android from Verizon, AT&T is purportedly looking for a strategy to counter the hype. Then again, slashing the price of Apple’s flagship phone so early in the product cycle might be more than Steve Jobs is willing to give this holiday season.

Although the mothership gets endless grief for their byzantine app vetting process and for barring some apps, there’s no question the iPhone’s the smartphone to buy for the biggest selection, both in terms of quantity and quality, of mobile software. Still, those issues linger, though the FCC and Verizon seem to be pushing Apple and AT&T in the right direction.

The Motorola Android phone may or may not be an iPhone killer (probably not) but it looks like this first solid platform for the Google Android operating system will heat up the smartphone wars.

For the cynical, the obvious conclusion here is that Ma Bell’s marketing team didn’t have anything to counter Verizon with so the company decided to hit back with a legal filing. Although there may be some merit in AT&T’s legal machinations, bringing in the lawyers is a “jump the shark” inflection point in the two companies’ increasingly nasty competition for subscribers.

The same lovely fellow who got himself banned from the iPhone App Store for creating more than 900 mostly useless applications, as well as over 100 complaints from competitors about stolen software code, is back in the news. This time around it’s the feds making the accusations and they’ve filed an indictment accusing Khalid Shaikh of using DOS attacks against a company he once headed.

Microsoft’s hype-driven search decision engine interface has now been optimized for the iPhone and iPod touch, as well as a bunch of the usual touch-based suspects, including the Zune. Features include easy tabbed homepage navigation and tabbed search results organization.

Palm said, “Tit,” and now Apple’s answered with a cursory “tat.” The ongoing war between the two companies over iTunes syncing rumbles on with neither side apparently willing the concede let alone play nicely with the other.

Although I’ve yet to put it to the test, there’s a lot to like just reading through the changes made to this open source project. Have a look at what’s been added and, just as important, what’s been fixed in this milestone release.