As the story goes, the cheaper phone "could resemble the standard iPhone, with a different, less-expensive body" -- perhaps an iPhone that relies on polycarbonate plastic instead of metal / glass. It's most certainly unlike Apple to cater to the lower-end; when the netbook craze was in full force, it resisted the obvious urge to cut corners on its MacBook Air in order to play ball in that space. And, most recently, its smaller iPad didn't come close to matching items like the Nexus 7 in price.
What remains unclear, however, is if this report is merely a masked rehash of a DigiTimes report that surfaced earlier in the day. For those unaware, DigiTimes doesn't have the purest reputation when it comes to nailing Apple rumors, and given that a low-end iPhone has been rumored for nearly as long as the iPhone has existed, it's even more unclear if there's a reason to put more stock in this one compared to those prior.