Additionally, a source -- who confirms this is the next Apple iPhone -- also tells us that the device apparently does have a higher res screen on-board, a front-facing camera, a higher resolution camera with flash, and takes MicroSIM cards (that's the little "button" around the side you see in the Twitpic which is floating around the internet). We're working on uncovering more info, but right now you can take a look at the proof above for yourself, and in the gallery below.
Note: The device we're talking about can be clearly seen in the UPPER RIGHT HAND CORNER OF THE PHOTO, you know, with the arrow pointing to it.
Update: A Mac Rumors forum member has just posted pictures from Chinese site WeiPhone of what appears to be the guts of this device. These images line up with what we know right now. We've added a gallery of the shots below.
Update 2: In response to commenters and tipsters questioning the differences between the Twitpic and WeiPhone pics and the "San Jose" photos; these are likely handmade demo units, therefore there will be minor differences between them such as the screws appearing and then not appearing. We believe the models which will roll off of the production lines in China will look like these devices, likely with some minor physical tweaks, but they will look like these phones. Other major design decisions are already set in stone, such as the rumored glass back, which is present on both of these devices (Daring Fireball's John Gruber mentions them here). Yes, there are very minor discrepancies between these photos, but you need to understand they are from a very small pool of hand-built tester units. It is incredibly likely that the next version of the iPhone will look like the photos you see in the gallery below, and we certainly wouldn't claim that if we didn't have good reason to believe it.
Update 3: Gruber has expanded on the info concerning a glass backing for these new devices, and he's dug up a 2006 Apple patent application on a ceramic enclosure for handheld devices which is also (ding ding ding), radio transparent.
iPhone 4G: proof
iPhone 4G internal shots from WeiPhoneSee all photos