Both a Reuters and a large French newspaper (Le Figaro) are reporting that the iTunes phone is close, the French newspaper is reporting that its a modified version of the Motorola E398 handset and will have 512mb of storage.
Reuters on the hand are reporting that "Motorola and Apple have been talking to Cingular about it using the iTunes Phone" Mark Sue Capital Analyst at RBC said in a recent research stint that Apple and Cingular were working out revenue details. Surprisingly Apple and Cingular declined to comment.
According to Le Figaro the iPhone could be released as early as this Tuesday.