Theories abound as to what Apple is packing into its next generation smartphone and more importantly, when will it come out.

Some of these theories make sense, but some are completely off the wall.

Couple that with the viral-nature of the Internet, and a complete overload of Apple related coverage globally, it's hard to get a proper grounding on what consumers of what's fact and what's fiction.

If you get a kick musing over every speculative tidbit that arises about what's next, this article isn't for you.

But if you want to get the most accurate information outside of Cupertino, IBT has gone wallowed though the disinformation to bring you the most accurate glimpse of what we can reasonably expect in the latest and greatest iPhone 5.

Brand New Operating System: iOS 5

This is a safe bet since it was announced.

width=251Apple's VP of Software Scott Forstall took the stage at Apple's World Wide Develop Conference in San Francisco to rattle off the litany of usher in the long awaited features.

The VP said that there were over 200 new features coming to the iPhone and iPad, and took time to demonstrate 10 key ones.

Perhaps  the biggest, and least expected announcement was that the new iOS no longer needs to be connected to a PC for startup the first time or to receive updates. That all happens over the air.

We are living in a post PC world, Forstall says. Especially with the iPad, we are ushering in a post PC world. We know we are selling to a lot of households that just don't have computers.

Now, if you want to cut the cord, you can, he says.

The latest iteration of the iOS will allow iPhone and iPad users to start setting up the device right out of the box, whereas before the device first needed to be connected to  a PC.

The exec also introduced a new notifications feature that makes it easier to see what's happened on the phone in one place.

The way Apple notifies users now is a throw-back to its first iPhone in 2007. Pop-ups appear, sometimes interrupting a user, and forcing users to respond before they disappear. Users have frequently

The notifications are now aggregated and assessable by sliding your finger across the top. Android has a similar feature. When users visit the notification center, they can also see updates on weather and stocks.

How about the Hardware

Obviously the details here are a little more scant, given Apple's legendary tight ship. But looking at the supply chain and Apple manufacturing partners, plenty can be ascertained with a certain degree of accuracy.

width=245Mobile industry analysts say that Apple has already begun production on the next generation of its venerable smartphone, expected to feature the A5 processor from its iPad 2 cousin.

It will also feature an 8-megapixel camera, either from Sony or from long-time Apple supplier Omnivision.

Questions such as whether the new device will be a dual-mode GSM and CDMA device, whether it will offer 4G wireless, or LTE, connections, and whether there will be a follow-on model early next year, as some have speculated.

This device would use chips and displays of similar quality to today's iPhone 4, according to people familiar with the matter.

Not without Surprises

Most next-generation phones are expected to run on 4G, or LTE, high-speed wireless networks, instead of today's 3G networks. Even current iPhone rivals are sporting 4G.width=244

But some analysts think the next iPhone will not have 4G, at least at first.

Wedbush Securities analyst Scott Sutherland said his checks and also public comments by Verizon leads him to believe that the iPhone that comes later this year will be 3G.

He calls this first phone a 4S, but surprisingly, expects another phone in January that will span 4G CDMA and GSM wireless networks, which will eliminate a two-class citizen situation for the iPhone at present.

Other analysts have chimed in supporting the 3G claim, citing poor battery life of currently available 4G chips and the disaster in Japan hampering supplies.

Another shocker?

Apple could prepare a cheaper, lower priced iPhone as well, capturing the lower-end market and emerging markets.

Needham analyst Charlie Wolf believes it could even be a pre-paid phone, allowing for an emergence of what he calls an iPhone Lite.

The only way these second-tier licensees can survive is to compete on price rather than features. This, in turn, most likely will trigger a price war between Android licensees that could even engulf the name brand vendors.

Its Head in the Clouds

The most important changes is expected  the new cloud-based features, which represent a significant step forward for the operating system, according to Jefferies analysts Peter Misek.

width=260Apple built what could be the largest data center in the world in Maiden, North Carolina.

The half a million square feet center is expected to live this spring, will give Apple massive computing to accomplish five key things, according to Sanford Bernstein analyst Toni Sacconaghi.

1: A larger advertising platform, for serving up iAds

2: A digital locker in the cloud to synchronize content between users' Apple devices

3: a music streaming service on a subscription basis;

4: an aggressively priced video subscription service

5: and a service that would support a voice interface on Apple devices, taking user requests in spoken natural language and returning answers, similar to Google's free voice search.

Charge it to my iPhone

Near Field Communication allows devices to communicate to other devices using short waves.  The reason this technology has caught fire has been its use in mobile credit card payments. 

It already has inroads in Japan and other Asian countries. Jupiter Research has projected that NFC Mobile Payments will exceed $30bn by 2012 (September 2009). Google also rolled out its own Andorid phone with the same technology.

Analysts have held that the next iPhone would feature this feature for nearly 6 months.NFC technology would allow iPhone users to swipe their phones in front of a reader, and make quick credit card payments.

The NYT interviewed one person familiar with the new feature on  March 22 who said the phone's credit card information would be tied to information currently used on iTunes, making it simple for customers to set up the mobile payments.

This echo's the hunch Ticonderoga Securities analyst Brian White expressed to clients on the 22nd of February:

We believe the adoption of NFC will make the smartphone an increasingly invaluable asset for consumers and we believe Apple is best positioned to take advantage of this trend in the coming years, though he didn't elaborate.

But be forewarned, there is a growing chorus of analysts that now believe this is not going to be the case.

When is it Coming?

The next generation of Apple's smartphone is starting to hit factories, ramping up for a September release date.

The consumer electronics giant has contracted out Catcher Technology of China, according to Jefferies & Co.'s Peter Misek, prepping for a production ramp-up in July.

Our checks and guidance from Catcher Technologies indicate

component orders beginning for the iPhone 4S, Misek said.

Catcher, the metal casing manufacturer for Apple, raised its outlook for its Q2 and for the second half, suggestion greater scale on its aluminum unibody products, Misek explained.

Misek told investors that Apple should be able to make 5 million to 10 million of the new phones in the September-ending fiscal Q4, and 17 million to 19 million iPhone of various models in that quarter, which would be an increase from his 16 million estimate for the current, June-ending quarter.