Apple is working on the next generation of iPhone, according to the Wall Street Journal, and could be developing a special edition for US network Verizon.

Although it was widely expected that another year would see a fourth version of Apple's popular iPhone, the WSJ's story will ramp up the excitement ahead of the US iPad launch at the weekend.

The fourth iPhone is expected to arrive in the summer – a year on from the arrival of the 3GS – and predictions and hints are raining in as to what it will bring.

Features?

John Gruber on Daringfireball.net suggests that the fourth iPhone will use an A4 system on a chip and have a 960x640 resolution.

iPhone HD is still being widely touted as the name, and there's talk of a front facing camera and 4G/WiMax/LTE compatibility.

Of course, perhaps for the first time since its arrival, the iPhone has come under a significant threat from other phones vying for its crown.

HTC's Desire and Google Nexus One have both won plaudits, and the Android operating system is giving consumers a more open option.

But, Apple is nothing if not capable of fighting back, and all eyes will be on what the company does next for its plucky handset.

Via WSJ and Engadget