Analysts expect the iPhone 5 to have a similar exterior as the iPhone 4, but include more advanced features, such as a dual-core processor, 8-megapixel camera and 1080p video recording. These updates, which mark a slight upgrade from the iPhone 4, would create a substantial gap between the 3GS and current iPhone hardware.
Wireless carriers often cut the prices of old devices just before they release new products. When Apple rolled out the iPhone 4 last year, it dropped the price of the 3GS to as low as $100 with a two-year contract. Many analysts expect Apple will do the same when the iPhone 5 is released, putting the iPhone 4 at a reduced price.
In addition, the new iPhone 5 and continued sales of the iPhone 4 will likely mean the end of production of the 3GS. The new price will likely make the 3GS sell quickly, and once it’s gone it may never come back.