Wow, this is pretty crazy. After reading engadget and now gizmodo, I think this is the production model we'll see in June. It's already April and they're already in production to produce millions of units for launch. The biggest improvements to me are: 1) front-facing camera - this will go well with VOIP multitasking announced in iPhone OS 4.0, 2) screen resolution increase, probably double according to John Gruber, and 3) flash camera and better resolution. It's probably faster than previous models as well.

The glass back should also improve reception.

I just want it to work on a non-AT&T network (Verizon).

It instantly reminded me of this post about how apple does controlled leaks http://news.ycombinator.com/item?id=1034741

My guess is its the real 4G and this is part of an intentional leak because the 4G wasn't getting the level of coverage Apple wanted (iPad hangover?). I mean, otherwise Gizmodo would be in hot water (I assume it is technically reported as stolen).

Next, how is Apple planning on playing this out? Will the lawyers play their part and blow some hot air?

My first thought after seeing this is: I wonder if the person who lost it will be fired?

Secondly, he is toting that it has a plastic backing now - allegedly, for increase in reception range. Do you think that could be just for the purposes of the prototype?

To me, it really doesn't look like a polished piece of work that Apple normally puts out.

Yeah, unreleased iPhones get "lost in bars" all the time. ;-)

If this really is a prototype that Apple lost, and gizmodo publicly admits that they know that Apple wants it back, wouldn't disassembling someone else's property and publicizing it on a major web site be pretty risky from a legal standpoint? (Unless this is a controlled leak)