Round two: Engadget's mystery phone travels into the past

Busy Sunday. Despite earlier reports that the supposed next-gen iPhone prototype was actually a Japanese knockoff phone, the eagle-eyed team at Engadget hasn't given up the chase. The latest development highlights a second device in some of the blurry spy shots from back in January that turned out to be testing shots of the in-progress iPad, and if you look at it just right... it looks quite a bit like the found phone.

Despite the blocky look of the device and the stranger-than-strange circumstances surrounding its discovery, Engadget is now saying it has a source to back up the conclusion that this is the expected design for the next iPhone.

Update: We were happy to have Joshua Topolsky join us on last night's talkcast, so you can hear the story straight from him.