Last week, we reported on a new rumor that Apple was working on a smaller and cheaper version of the iPhone (aka iPhone Nano) to increase market share against Google’s Android handsets. Today, the Wall Street Journal confirms that according to their sources, Apple is indeed working on a less pricey version of the iPhone.

The Wall Street Journal claims that the new, smaller iPhone will be available “at about half the price of Apple’s main line of iPhones.” The smaller iPhone is said to be sold alongside Apple’s main line of phones, which will provide consumers with more options.

The report also mentions that this new iPhone will be significantly lighter and will have an “edge-to-edge” screen, along with voice-based navigation for Maps. WSJ’s source also claims that Apple plans to upgrade the iPhone 4 as well.

The person who saw the prototype of the new iPhone said the device was significantly lighter than the iPhone 4 and had an edge-to-edge screen that could be manipulated by touch, as well as a virtual keyboard and voice-based navigation. The person said Apple, based in Cupertino, Calif., also plans to upgrade the iPhone 4.

Would you rather buy a cheaper, stripped down version of the iPhone? Let us know your thoughts in the comments!