Rumors of the return of the larger-than-iPhone tablet were revived back in September 2007 by Appleinsider. The new device is said to be powered by the same touch OS X which currently powers the iPhone, though with a more advanced implementation of multi-touch. The current iPhone allows up to 2 points of contact and use is limited to zooming. Apple's patent applications have detailed research into a number of advanced gestures.
In the market for an iPhone? Here's a breakdown of all the currently shipping iPhones from Apple.