Although the last few days have been packed with rumors pointing to a smaller iPhone with a smaller display, Digitimes is now reporting that Apple’s fifth-generation iPhone, due in June, will pack a 4-inch display to go toe-to-toe with Android device’s larger displays. This information is said to come directly from Apple’s production lines.

Earlier today another rumor claimed that Apple is working on three prototypes for their next generation iPhone with one of them including a physical, slide out keyboard and the other being mostly an internal upgrade with a speedier chip and an eight-megapixel camera.

Digitimes is also reporting that Apple is planning to launch an iPad 2 with an “enhanced A4″ processor, with no explanation as to what that means and a fifth generation iPhone with the rumored A5 processor. No word on the differences between the two chips or if the iPhone 5 will feature a faster chip than the iPad 2. At this point it looks like Apple’s next major handset is starting to take shape.

We are probably looking at a fairly major internal upgrade with a faster chip, perhaps more storage (cloud based?), a dual GSM/CDMA antenna, and probably more RAM. As for externals, Apple’s iPhone 4 was a major redesign so perhaps the exterior design will simply see a new display: A 4-inch Retina display with Super PLS technology?

Also: What of the current iPhone gear?  Currently it is all ‘geared’ to fit devices with 3.5 inch screens.

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