A few months ago John Grube (from Daring Fireball) reported that Apple has lost a prototype for the next gen iPhone (iPhone 4). Well it looks like that prototype has been found in a bar in Redwood City.

The phone was in a sleek camouflage casing to look like an iPhone 3GS, but when the founder removed the casing he surprised at what he found…

Hit the jump for more info and photos.

The folks at Gizmodo.com got a chance to play with this iPhone. Don’t be confused, they get a lot of fake tips all the time… but after playing with it for a few days and completely taking it apart, they are almost certain that this is the real deal.

What’s new
• Front-facing video chat camera
• Improved regular back-camera (the lens is quite noticeably larger than the iPhone 3GS)
• Camera flash
• Micro-SIM instead of standard SIM (like the iPad)
• Improved display. It’s unclear if it’s the 960×460 display thrown around before—it certainly looks like it, with the “Connect to iTunes” screen displaying much higher resolution than on a 3GS.
• What looks to be a secondary mic for noise cancellation, at the top, next to the headphone jack
• Split buttons for volume
• Power, mute, and volume buttons are all metallic

What’s changed
• The back is entirely flat, made of either glass (more likely) or shiny plastic in order for the cell signal to poke through. Tapping on the back makes a more hollow and higher pitched sound compared to tapping on the glass on the front/screen, but that could just be the orientation of components inside making for a different sound
• An aluminum border going completely around the outside
• Slightly smaller screen than the 3GS (but seemingly higher resolution)
• Everything is more squared off
• 3 grams heavier
• 16% Larger battery
• Internals components are shrunken, miniaturized and reduced to make room for the larger battery

Read more about it at Gizmodo.com.

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