... if the low end rumors are true this is a very un-sexy update. I mean the faster processor and better camera are not exactly the blow your skirt up kind of things. Now, I definitely think that the processor upgrade is a great move, and this is also true for the camera upgrade... I think the point is that people are hoping/expecting more from Apple than an incremental upgrade. ...
I disagree. What you describe is exactly what I'm hoping for and it would 'blow my skirt up' enough to make me buy one.
What you are saying here is almost word for word what a lot of people said just before the iPhone 3Gs came out too, and the day *after* it came out, everyone was falling all over themselves to say what a great move it was and how they were going to run out and get one.
I think the bottom line is that despite what people say on forums, Apple pretty much has a licence to print money here and no matter what comes out, it will sell like hotcakes. That being said, I don't see them blowing the high end part of the market that they typically like to occupy, by coming out with a giant screen mini-iPad type design as the rumours have been suggesting, which would only satisfy the budget conscious low-end american market.
iPhone 4 is very definitely the sexiest phone on the planet right now. The idea that they might re-use the basic design for the following year is not only *not* crazy, it's very sensible and pretty much to be expected.