Derek Underwood has posted on his blog that Apple is putting the final touches on the new and improved iPhone and iPod touch, which they will launch soon. The new devices will see substantial increase in performance and capacity. The existing iPhone owners will be able to upgrade before their contract expires at reduced rate.

The changes will include faster CPU, more system and onboard memory, support for running concurrent applications, improved battery life, slightly different form factor, updated Safari with CoverFlow, system wide copy/paste and higher megapixel camera. As you can see Derek hasn’t give any specifications, but rather pointed out the obvious changes that will be made to next generation iPhone. We are very sure that new iPhone will be released by summer of 2009 and it will add significant new features that will keep iPhone ahead of the new smartphone crowd.

In other iPhone related news/rumor, PMP Today is reporting that Apple will introduce iPhone Nano in June at an event hosted by Steve Jobs. The iPhone Nano will have smaller footprint as the iPhone design team has managed to relocate the home button to the side. The website has also posted an image and claims that the iPhone Nano might look like the image and it will ship in three-color options. We have no such information and our sources say that Apple is working on second iPhone mode, but they don’t know if it will be iPhone Nano or not.