UPDATE: 16GB iPhone confirmed to launch today in UK

BREAKING NEWS: Apple just released a statement saying the iPhone now comes in a new 16GB model for £329 (inc VAT), joining the 8GB model for £269 (inc VAT). The iPod touch now comes in a 32GB model for £329 (inc VAT), joining the 16GB model for £269 (inc VAT) and the 8GB model for £199 (inc VAT). My take on this is that this is not the move which will convince more UK consumers, who are used to cheaper subsidised handsets, to get the iPhone. O2 already markets the 8GB Nokia N95 for free with a contract, and that includes GPS. However, it does position Apple for a price-cut on the 8GB iPhone – just not soon enough for some.

(Posted Earlier): Will a 16GB iPhone launch in the UK today? That’s the view of gadget blog Engadget which has a tip-off that O2 staff in the UK have been warned that the 16GB iPhone will launch today at 1:30pm UK time. Price: £329 (likely to be $599 in the US like the original 8GB iPhone). The 16GB iPod Touch is certainly small enough to suggest that a 16GB iPhone would be perfectly possible. I’ve put in a call to 02 but we’ll see after 1.30pm I guess. But will it be enough to stem problems over sales of the high-priced mobile? I doubt it – it seems UK customers just don’t like paying through the nose for a mobile, even if it has more memory.