It doesn't make sense. Why delay until September if you only make minimal changes? If they delay the launch, they must work on something very hard to implement, something revolutionary, not just a faster processor.

"It's called the iPhone 4. The S stands for Speed!"

Makes for a good rumor but I doubt they'll delay very long as the market moves fast.

This rumour is shaping up to look legit, but why the change in the release cycle? I cant imagine this speed bump will have affected the release schedule by a full season.

Some ideas that cross my mind: Lion and/or new data center caused the need for this years delay? New larger display in about the same size casing needs more lead time for devs in the new SDK for apps and their submissions to be shown at WWDC? Need extra time to add some new HW to the iPhone 5, like a thunderbolt controller for faster syncing and charging to Macs to help legitimize the new port? Releasing the iPad so close to iPhone proving difficult with the excessive popularity of both categories so moving them to 6 months apart was needed? Perhaps based on the previous item, the iPhone as the most profitable HW product and iPod least having them both released at the same time for the holidays makes more sense 5 years later?

Well rumors are starting to get better but still don't sound right. Would Apple put out a new model IPHONE just for a speed bump?? Could be because theres a rumor about the Iphone5 coming in 5 colors

This makes sense.

Steve Jobs claimed that the iPhone 4 took 18 months of engineering. Apple is not staffed to come up with an entirely new iPhone design on an annual basis; everything else in their product line tends to have a ~2-3 year design cycle.

Speed bumps/spec increases are pretty common at Apple with subsequent models being refinements of the existing design. It's also a way that Apple can maximize ROI from a particular design; we all know that they (and their shareholders) love big gross margins from having a design investment pay off from volume sales.

Both the iPhone 3GS and iPod touch 3G were examples of "speed bumped" models with minimal exterior design changes. It is possible that Apple's product roadmap calls for major redesigns on a periodic non-annual basis.

Why the iPhone 2011 would be delayed to September is anyone's guess, however it might related to component availability from the supply chain. This might be a silicon issue: the A5 SoC or the Qualcomm dual-mode GSM-CDMA cellular chip (present in the CDMA version of the iPhone).