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Russell Beattie makes a pretty convincing argument that Apple will launch a mobile phone. Ross Mayfield thinks that they will WiFi-enable the iPod first, something I've asked about too, and for which a patent exists.
If they're going to all that trouble, why not combine some things. People are already comfortable with form factors like the iPod, the Treo, and the Blackberry. So why not combine the iPod Mini with smart phone technology, a mini-keyboard and a camera? Currently cost would be a factor, as well as space constraints. Motorola is already claiming they have a "mini iPod that makes phone calls" though that might be a bit of a stretch.