Google has already created mobile versions of some of its applications (including Gmail) available and I wonder if such a device wouldn’t possibly work as a kind of thin client, accessing mobile versions of Gmail, Google Calendar and other Google applications over a fast mobile network connection. That might be taking it a little too far as such a device would be entirely dependent on the presence of such a network but at the very least, such a device should ideally synchronise with the online versions.
The anticipated Google Phone could have a screen of similar or better quality to the video iPod and has the potential to really bring home location based services, particularly location based Google services. There are tremendous possibilities when you combine the power of Google, high speed mobile networks and location based services and technologies.
For the time being, the only thing to really do is to watch this space and see if this rumour comes to fruition.