Rumors are flying around about the specs of the new iPhone supposed to be coming out July 17. Can we believe rumors coming from some unknown factory in China? I don’t know. However, there are rumors we can trust and those come directly from John Gruber of Daring Fireball.

According to Gruber’s sources, the upcoming iPhone will carry a next generation processor:

Let’s say the rumors are right — and I believe they are — that the next-generation iPhone’s CPU will be running at 600 MHz. In the same way that, say, a 90 MHz Pentium was more than 1.5 times as fast as a 60 MHz 486, the 600 MHz CPU in the next iPhone will be more than 1.5 times as fast as the current 400 MHz iPhone CPU.

Apparently, RAM and storage will also be increased:

More RAM will significantly help performance, too, and I believe the new iPhones will sport 256 MB of memory, up from the 128 MB in all current models. Prices will stay the same — $199 and $299 — but storage will increase to 16 and 32 GB.

What about the overall look of the new iPhone?

Industrial design changes will be subtle, perhaps very subtle. I expect that cases designed for the iPhone 3G will continue to fit the new iPhone, and that the only colors will remain black and white.

Gruber also confirmed that the next iPhone will include a magnetometer, and improved camera that will shoot videos, and basic video editing capabilities.

I invite you to read the full article for more insights on the new iPhone.