Apple and AT&T may use an 8GB iPhone 3GS as a 'secret weapon' against the launch of the Motorola Droid if a rumor proves accurate. Two separate sources of BGR's say the two iPhone partners are considering replacing the existing 8GB iPhone 3G with a 3GS variant, preserving the same capacity and $99 price. The move would undercut Verizon by offering the latest iPhone at the same price as the less ambitious Droid Eris.

The rumor is still "definitely not confirmed" and should be treated with caution. However, it potentially corroborates rumors of an 8GB iPhone 3GS at Rogers. Although little has materialized since the story broke this summer, apparent leaks from Rogers' system had hinted that the Canadian provider was ready for the more economical iPhone 3GS and would switch over once it had run out of stock of the iPhone 3G. Spokespeople at the time would neither confirm nor deny the rumor and only reiterated what Rogers was selling.

Beyond Verizon, whose Android launches have involved high-profile ad campaigns, an 8GB iPhone 3GS also stands to head off a new wave of competition at the $99 price point ranging from the BlackBerry Curve 8520 and 8530 to the Palm Pixi.